Are Supply Chain Disruptions Impacting Your Morning Coffee?
The global coffee market is facing mounting pressure as supply chain disruptions drive up prices. Tight supplies, extreme weather and shifting production trends continue to impact availability, making coffee more expensive for consumers and businesses alike.
The World Bank’s latest Commodity Markets Outlook highlights an 18% jump in its beverage price index in December, largely driven by sharp rises in both coffee and cocoa prices.
While the index dropped 6% in the third quarter of 2024, it remains a staggering 91% higher than the previous year. After soaring 58% in 2024, prices are projected to decline 9% in 2025 and a further 3% in 2026 as production stabilises.
Resilient supply chains are crucial as prices climb
Coffee producers and roasters are grappling with price volatility as supply constraints continue to shape the market. For some, however, this is just another challenge in the industry’s long history of ups and downs.
Bob Fish, Co-Founder and CEO of BIGGBY COFFEE, remains confident in his company’s ability to navigate market turbulence.
“BIGGBY COFFEE will be fine, we have understood that this moment was inevitable,” Bob said on LinkedIn.
He added: “Our model will not only survive but flourish. Hint, you have to deeply care about your supply chain and the people in it, from producer to end user. We will be 30 years [old] in March. Four coffee waves, the financial crisis of 08, COVID and multiple competitors. We always persevere.”
Despite this confidence, industry-wide concerns persist. Arabica coffee prices surged 13% in December, reflecting a year-over-year rise of over 60%, while robusta prices climbed 5%, more than doubling compared to 2023.
Global coffee production for the 2023-24 season is estimated at 169.8 million bags, with a modest increase to 172.4 million in 2024-25. However, supply remains below 2020-21 levels. Forecasts predict an 8% decline in arabica prices in 2025 before stabilising in 2026, while robusta prices are expected to drop 7% in 2026.
Major coffee brands are working to reassure stakeholders despite ongoing market instability. Starbucks CFO Rachel Ruggeri told investors: “Our year-over-year coffee price impact was minimal.”
Brazil’s production struggles deepen supply chain risks
As the world’s largest coffee producer, Brazil plays a critical role in shaping global supply and pricing. The country accounts for 38% of global coffee production, making its output a key factor in market stability.
According to Conab, Brazil’s national food supply agency, coffee production for 2025 is forecast at 51.8 million bags, a 4.4% drop from 2024 due to severe drought and delayed rainfall.
Arabica production is expected to decline 12% to 34.7 million bags as part of its natural biennial cycle, while robusta output is set to rise 17% to 17.1 million bags thanks to improved weather conditions.
Farmer behaviour is also affecting supply. Many growers have slowed sales, anticipating even higher prices in the 2025-26 season after benefiting from rising prices in 2024.
Comexim, one of Brazil’s largest coffee exporters, estimates 2025 production at 63.2 million bags, down 1.8% from the previous year. Exports, which hit a record 47.5 million bags in 2024-25, are projected to fall to 44.9 million in 2025-26 due to lower production and reduced carryover stocks.
Meanwhile, speculation in coffee futures is adding further volatility. In early 2025, ICE Futures US New York arabica contracts reached record highs, surpassing US$4 per pound for the first time.
This marked a 25% increase since January, building on a 70% surge in 2024. Robusta futures in London also hit record levels before easing slightly, though supply constraints mean prices remain sensitive to external shocks.
Climate change is reshaping coffee production
Beyond immediate supply issues, climate change poses a long-term risk to coffee production worldwide. Rising temperatures and unpredictable weather patterns threaten yields, potentially reducing the amount of land suitable for growing coffee in the coming decades.
Reports from the Intergovernmental Panel on Climate Change (IPCC) suggest that these environmental shifts could significantly disrupt supply chains by 2050. A review of 148 studies examining climate change’s impact on coffee-growing regions in Latin America, Africa and Asia points to increasing threats to long-term sustainability.
However, many studies lack detailed modelling of how these risks interact with broader ecosystem changes, highlighting the need for further research.
As climate-related challenges persist, industry experts warn that extreme market swings could become more common. Bob Fish draws comparisons to past price surges, recalling a historical precedent for major spikes in coffee costs.
“Is it possible green coffee could go to US$10 a pound? Yes, it’s happened before. Frost ravaged coffee production in Brazil in 1977 and green coffee prices peaked at (an inflation-adjusted) US$10.67. So, yes, it is possible.”
With supply chain pressures mounting and climate risks reshaping the industry, coffee producers, exporters and roasters face a critical period of adaptation. Investment in sustainable sourcing strategies and resilient supply networks will be essential to navigating the challenges ahead.
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