Coffee Market Update | April 2025
Coffee Masters | Coffee Market Update | April 2025
For nearly 18 months now the price of coffee has been on a steep, upward trajectory and, apart from some occasional short-lived dips, the expectation of it coming off has become more of a hope.
A range of factors, from global supply chain disruptions and climate change to coffee being the second most traded commodity after crude oil, can help explain why.
Supply of coffee beans
Global reliance on supplies from relatively few regions can result in a ripple-effect driven by changes in just one of these regions. In recent years Vietnam’s government has encouraged coffee farmers to rip up coffee plantations and replace them with a fruit called durian which is extremely popular throughout Asia; especially China. Durian trees can be harvested after just 1 year and the profits are greater than coffee. Vietnam’s durian exports to China nearly doubled from 2023 to 2024.
Vietnam is the largest producer of Robusta beans, so with their declining yields (down by 50%); and the rest of the coffee producing regions scrambling to pick up this deficit the global supply, or lack thereof, has almost tripled prices since early 2023 (as shown in the graph below).
Brazil produces the largest volumes of instant coffee in the world and, historically, has bought Robusta beans from Vietnam but with the reduced supply, they have had to use their own crops of Arabica beans instead. Brazil is the largest producer of Arabica beans in the world so this reduction in supply has had this delayed, secondary impact on the global coffee market, this time for Arabica beans. Arabica prices have more than doubled from this time last year and have had the most significant increases in November/December 2024 and February/March just gone (as shown in the graph below).
Filling the supply gap
A concern for the coffee farming industry, as a whole, is its ageing population as younger generations are attracted to less challenging forms of employment with more economic certainty.
Starting a coffee farm is not an easydecision. Coffee is generally an annual crop and farming is either very labour intensive or very capital intensive (heavy machinery). There are only a few producing countries that can have two harvests per year. In addition, it will take approximately 3 to 4 years for the newly planted coffee trees to bear fruit. This is an exceptionally long time to wait for any return on investment and also a long time for the impatience of global demand.
Climate change
Climate change is undoubtedly affecting yields all over the world; coffee is particularly sensitive to weather conditions and changing climates are affecting coffee-growing regions. Adapting farming practices and movement into new regions may overcome some of this, however, extreme weather events like droughts and floods will cause real destruction to specific crops and these events are on the increase. Climate change aside, there is also the known patterns of coffee plant yields where every few years the natural depletion of nutrients in the soil and the need for ‘tired’ plants to rejuvenate will also reduce supply and it is widely accepted that we may be in one of those periods now too.
The coffee trend is still growing
Nearly every country enjoys a warm cup of coffee whether that is a regular instant or a barista made coffee. In the UK, 95 million cups of coffee are consumed each day. More people around the world are also drinking coffee; especially a growing consumption in big markets such as China – leading to more demand and further pressure on supply chains.
Commodity markets
With rising consumption and falling yields the stability of the coffee market is more difficult to predict than ever. Arguably it is the most uncontrollable aspect of the coffee industry and also the most frustrating. The coffee can be grown, harvested and the farmers paid, yet sit in a warehouse and double in price all down to supply and demand and at the whim of a trader or AI. Of course, the opposite can happen also but, unfortunately, although there is confidence the markets will come off and stabilise in time, it has been a long 18 months thus far.
This is the situation the coffee industry finds itself in. New growers need to be encouraged to start farming coffee. To do that, there needs to be a realistic return on investment; meaning higher prices for the farmers. This is slow progress and, for now, it has driven coffee prices to unimaginable heights. We will all have to accept that to enjoy our favourite coffee, we will need to pay more for it.
What Can Coffee Shops Do in 2025?
Yes—you can charge more
Consumers still want small luxuries. Make it worth their while with:
• Iced & flavoured seasonal coffees
• Diverse milk options
• High-margin pairings and bundles
• Trend-focused menus with creative offerings
