Global coffee trade grinding to a halt, hit hard by brutal price hikes
reuters.com
reuters.com
Everybody knows that climate change could be a problem, but he says an even bigger problem is urbanization. The average coffee farmer’s age is 50-something and their kids don’t want to take over the farm, they want to move to the city. The people who are willing to work the farms, want to be paid a lot more, so there’s upward pressure on prices.
Right now cafes can charge $4-$6 for a coffee drink and people seem to be willing to pay it. As coffee gets more expensive, how many people are willing to pay $6-$8? For a lot of cafes, it won’t take much of a drop in business to kill them.
Starbucks regularly charges $15 for coffee flavored drinks today.
I'm not worried about coffee. I'm worried about climate induced resource wars.
Uh, where? Worst I've seen is the extra large Frappucino, which could be as much as $10 after tax and a generous tip. I struggle to see how you could get to $15 for a single drink.
If you buy regular coffee or a more basic non-milkshake drink, they're closer to $5.
IMO if we actually wanted to overhaul our economy, we could do it by just having POS’s print the portion of each bill that goes into rent.
Then the culprit of COL increases would be quite clear.
Especially given that wages are themselves also driven up primarily by rent.
This number would be $0 for most cups of coffee (made in paid-for buildings) and <$0.02 for pretty much all the remaining ones, I think?
Rent on the other hand is 15%+ for every cup of coffee in perpetuity (not counting second-order question of what % of wages go directly into residential rent).
I agree with your response though.
Most people have no clue how much a storefront pays in rent.
The coffee shop business is only tangentially related to coffee. Whether you will be successful or not depends more on location, labor, branding, interior decor, music, bakery, food, upsells..
If coffee becomes more expensive, buying a bag of coffee for your home and being terribly inefficient with doseages and such would not be so viable.
If coffee houses can maintain price relatively stable they become much more viable. Especially since the other cost factors can keep coffee consumption in check.
Aiming for 25% COGS, that pushes up the price of a cup to $4.50 before milk, syrups, cups, etc. If the cost of coffee doubled, you'd be looking at the cost of coffee only being 38% COGS for a $6 drink. That kind of increase is not only going to completely remove all margins, but likely put you in the red per drink served.
All espresso based drinks you will find will be double-based.
And especially any place which is doing specialty coffee is going to be using larger doses to make extraction more consistent with lighter roasted coffee (in the realm from 18g to 28g).
It's pretty normal nowadays to see 20g or 22g baskets used in specialty coffee shops.
You can obviously order a single but the price difference is just a trick, the other shot gets dumped unless two people order singles at the same time.
You don't have to order the caramel drinks? There are coffee, latte, cappuccino etc too everywhere, right?
Meta: I've never seen anyone order a short, the only thing I've ever seen in those cups are espresso pulls or water (but it turns out a Short Flat White still has two shots - worth a look)
That's because Starbucks single espresso shot are absolutely atrocious.
</iamveryculinary>
Do you have a source for these claims?
Ask any coffee professional (someone who actually knows what they're doing).
Or just go walk around. Try to find a cafe which is using different portafilters with single spouts (an indication of a single shot basket). Or ask them. Buy a single espresso and watch what they do. You will never see them use a single shot basket or a single spouted portafilter. You will always see them split a double.
For #2:
Since nobody is using single shot baskets, and no reputable coffee shop is setting aside split shots to use in someone else's drink, the only time it would make sense to make a coffee from a single shot is if it would be too intense with a double (hard to imagine). The alternative is just wasting coffee in most cases except when you're lucky and your customers order drinks where you can use the other split shot. But I don't really see anyone splitting shots for milk drinks, maybe I've not paid enough attention as I don't drink them that often. Either way, you're still brewing a double shot.
You can again, just watch what they're doing. I've never seen a coffee shop where you can't see the bar and the machine. Just watch what happens.
Lastly, you can't dial in a single shot basket and a double shot basket at the same time, you need to have dedicated grinders dialled in for both. Nobody outside of Italy bothers with that. For specialty cafes you'd be doubling the number of dialled in grinders which would be especially impractical.
Huh? Most cafe's I see (Australia) the grinding is separate from the dispensing, and it is a single shot per pull. It's a big world out there mate, might be more of an isolated cultural thing than you realize or my neck of the woods is special. Either way, likely varies.
This is just not how espresso works.
You can dose the same grind into a double basket and a single basket and you will never get the same coffee out of both.
Maybe Australia is special but in Europe, the UK and America, except for Italy (and apparently some surrounding places) nobody is using single shot baskets.
This is jusg a well known fact in the coffee industry.
Unless you have some extraordinay amount of authority and/or credibility above and beyond that of the other HN users contradicting?
James Hoffman (coffee professional, winner of WBC) discusses the obscurity of single dose baskets in his video here. He mentions they're not often used in the home because he is discussing home espresso but the 50 caveats of single dose baskets apply to the industry too.
https://youtu.be/3oFV88PzEFE?si=_cUs33SeovZ0jHYJ&t=549
Discussion of single baskets by The Wired Gourmet pointing out that in the industry double and triple baskets are used and split in vast preference to single shot baskets. Also covering the difficulty of working with single shot baskets:
https://www.youtube.com/watch?v=3OnH2Woluck
The Real Sprometheus video talking about single shot baskets, their obscurity,
https://www.youtube.com/watch?v=y0XariiJiHk
A cafe owner talking about why single shot baskets are not worth it in a commercial environment:
https://www.youtube.com/watch?v=-N3OlSa-4Wg
The reason people in this section are disagreeing with me is because they have never made specialty espresso and have no idea how difficult it is to dial in a single basket, even if you're a cafe.
“All espresso based drinks” seems incredibly broad.
There may be some niche drinks that use less espresso liquid, but they're not common. If I was only given 0.8 fl oz (which, is what a single shot looks like) in an espresso drink I would be upset.
For reference, I use a 36g shot (basically 36ml if you wait for the crema to dissipate) for a 170ml "flat white" at home. This achieves a balanced strength for this kind of drink. You really have to get into the tiny drink category before you really reach the realm of "this is too strong and I must use a split single". And, in those cases, due to the fact of the double shot (and, I would struggle to come up with "sources" but it's again generally accepted that unless you can use the second split shot for a drink immediately, it goes down the sink), you are still often using a double worth of coffee for a single shot drink.
I don't have statistics, but I think that single spout portafilters are still common in traditional Austrian cafes. I agree that you can't perfectly dial in the grinder for both single and double shot, but only a minority of people care about James Hoffmann levels of perfection and outside of speciality coffee shops nobody drinks light roasts.
One curious thing I saw in a bar in Italy that their machine had a much smaller diameter portafilter, so they can make a 7g shot without these conical sieves.
This isn't about making amazing shots of light roast coffee, it's about the difference between an acidic and a bitter coffee. If your customers are buying and drinking straight espresso (also uncommon outside of Italy and some bordering countries) then they will notice and complain. Although I guess since most people in these regions drink singles, maybe cafes dial in for the single and just YOLO the double. I don't know much about how Italian cafes are ran as I am simply not into that style of coffee nor do I live in Italy. Outside of these regions where its common to drink straight espresso, most cafes just half ass the dialing in and if you ask for espresso its usually varying kinds of mediocre to trash. Regardless, nobody uses single baskets. In the specialty cafes where you can order a straight espresso and expect something decent to amazing, you also never see single baskets and single shots just result from a split with half of the shot wasted or in another concurrent customer's cup.
Regarding Austria, it seems like countries which border Italy also seem to often do single shots too. I didnt consider this but it also doesn't surprise me.
Regarding the portafilter, the industry has standardized on 58mm group heads in the commercial setting but there are still some smaller diameter machines out there which make pulling smaller shots much easier.
There are currently almost no new commercial machines in that format but its entirely possible it will change in the future.
I for one am considering buying an adapter for 49mm baskets so I can more easily extract good light roast espresso without needing the larger doses.
Some Swiss coffee shops do that, but we are close to Italy here. Lots of Italians live here and would be very unhappy without their espressos.
True, I'm not using 'premium' beans and probably doing it wrong but it works for me. Add in 'natural spring water' and 6oz of chocolate milk and I doubt it gets over $0.75.
Anything cheaper than that and you are firmly into the budget coffee tiers.
Common commercial beans are ~$24/kg at retail prices, and while 14g would be a double shot around here, let's assume that's a "single shot" since standards seem to differ a lot. That puts us at a much more reasonable $0.39 per "shot" of coffee after accounting for 15% waste.
On a personal note, I would actively choose to pay $0.40 more for coffee if I knew that the money went back to the farmers who produce it.
Where are you getting good coffee that cheap? You're pulling shots out of 7.5g of coffee?
I am buying some nice beans here in the UK and my espresso coffee cost has now reached £1.10 per.
I'm doing relatively standard 19g shots.
Normal premium beans are around €15 in a 450g bag over here, and I can't imagine they are all that much more expensive in the UK. If you buy in bulk, they will be a lot cheaper.
Yes at £20 per 350g I am paying slightly more than normal for "nice beans". But most places sell for no less than £10 per 250g of light roast. That's still 76p ($1) per shot.
The only things going for less are darker roasts, supermarket coffee and blends.
Their actual more expensive coffee (which even then, it's unclear if this is a blend or not) is 14 pounds a bag, which... when you scale to 350g comes out to, unsurprisingly, about 20 pounds.
For context, a few signs I see:
* The way they even describe the tasting notes don't generally align with coffee selected for light roast suitability. Dark chocolate is rarely a note you see in a light roast.
* Every single bean is described as '<roast level> roast with hints of <tasting note>'.
Also, maybe pricing is better in the UK locally... but their website appears to advertise only their cheapest generic blends at 10pounds/250g. Stepping up to anything else is 11 or 14 pounds per bag.
Ultra high end would be Gesha or something equivalent. Those often go for fun prices like £28 (and that is still on the low end) for a 150g bag in the UK. That's £3.50 for a 19g shot, and if I was buying Gesha I would probably get a triple precision basket or a step down basket because I would want the absolute best chance of extracting well if I'm spending that much.
My £1.10 shots are definitely above middle of the road. Maybe you can call them high end. But they're not ultra high end and a single shot of ultra high end is definitely a lot more than $.25 as the initial comment in this chain seems to claim.
I am spoiled for choice, I've modded my machine to be able to do electronically controlled pressure and flow profiles. I wouldn't even have a clue how to dial this in quickly enough to enjoy it (other than relying on Gagné's adaptive profile).
If/when I'm ever in Okinawa I might see if there's a local cafe which has already dialled it in and can brew it for me. I think that's probably the most cost effective way of trying this coffee.
My intended angle was to say that I think "nice beans" for a "standard espresso" starts lower than that, for the coffe-appreciating general public.
People like me, who thinks a Starbucks espresso is nothing special but decent enough. Anything better is nice beans! :-)
I don't claim it.
I responded to:
> But most places sell for no less than £10 per 250g of light roast. That's still 76p ($1) per shot.
> The only things going for less are darker roasts, supermarket coffee and blends.
Those are not premium beans, no offense. I agree, bulk pricing will be cheaper than retail, but premium bean pricing is still quite a bit more.
If you want the equivalent of 'having a glass of 500 euro champagne', you need to look appropriately upscale.
Here's an example of that, from April coffee roasters: https://www.aprilcoffeeroasters.com/collections/limited-coff...
They sell a 250g of a natural Gesha coffee for 928 kr - or ~85 euros. That works out to ~6 euros per 18g of coffee if you were to serve this as an espresso. Most of the time, such coffee is used for pour overs, though.
There just is no way to get as clear of flavor separation and striking flavors as you can get with some highly specialized coffee. Gesha coffee is well known, but you can also spend a lot on expensive processing techniques such as fermented coffees.
As an example, there was a coffee I had for a period of time that tasted like cherries. Not just “hint of cherry”, I had multiple people tell me this coffee tasted like candy. Not coffee flavored cherry, just cherry. I’m currently drinking a coffee right now that tastes like red wine.
Can you get a lot of the way there? Absolutely. A nice Ethiopian coffee naturally processed can be half or a third of the price of a Gesha and still have lots of fruity flavors.
It’s true that some expensive coffee doesn’t live up to the hype much like expensive wine, but it’s unfair to say that the only thing expensive coffee is buying you is uniqueness.
I don't mean to be intentionally obtuse, but it does seem like you just described that what you get primarily is uniqueness or degrees of uniqueness.
What I was intending to say is that you can absolutely get within a negligible margin for far less than half the price of say, 85 euro per 250g, which is comically expensive, all equipment and other ingredients kept more or less the same in terms of investment. Not all fermented coffees run that high either, and a lot of the cost comes from rarer varietals that may or may not be unique, but just aren't inherently higher quality than high specialty grades of others. For example https://www.prototypecoffee.ca/shop/oxaofizuq8la2g7m9ercvtxv...
That's not to say they aren't worthwhile or in-appropriately priced novel occasional experiences, but in a similar fashion to what you said, there are various high-grade less expensive beans to be had from Ethiopia, Indonesia, Colombia, etc.. that can distinctly taste like watermelon, starburst, blueberry, cherry; they're still very expensive relative to even quite good blends from a local roaster, but they're not that high. Incidentally, if I wanted just cherry, actual cherries at their already high price would be wildly less expensive, but that's besides the point. Ultimately they're still subject to variation in brew consistency, palate, etc.. to the point that I'd prefer to get on average 98% of the way to the same cup with 1/2 the spend considering how likely it is that some of it won't turn out that great anyway, especially without a multi-thousand dollar grinder or custom recipe water.
The exception to my comments may depend on market too, I don't know how expensive some of the extremely fruity Indonesian beans may be in EU for example, or how much a Pink Bourbon might be in Aus.
For all of the best specialty coffee I've had, there's been at least one cup at the same price-point, same roaster, same cafe, that just wasn't anything amazing, and it's a silly amount of money to chase an occasional unique novelty as a regular thing imo. I'd rather have very good most of the time for much less than half as much.
Fully agree. There's plenty of good coffee you can have that isn't stratopherically priced. That said, there's a certain price bracket where you just cannot get some of these flavors. Anyone buying $10/lb coffee will never get those flavors. If you want lightly roasted coffee with fruity or floral flavors, you have to spend a certain amount.
I'm not suggesting you have to spend the "$500 champagne" equivalent to get good coffee; I'm just saying that coffee isn't a percentage goodness thing. For certain types of coffee flavors, there isn't any way around spending money to get them. Certain flavors are a lot easier to achieve with lower cost coffee, though. Any sort of chocolate or nutty flavor is generally easier to achieve with cheaper coffee, so if that's what you like drinking... then you probably don't need to spend as much.
Zoegas fairtrade beans are perhaps twice that price. That is premium coffe. (like Barilla is a premium pasta, Galbani makes premium mozarella, Alfa Romeo makes premium cars, Rotari prosecco is a premium sparkling wine).
If you go far beyond that, you are in high end territory. (Ferrari vs Alfa Romeo, champagne over prosecco). There is no limit to what you can spend to get the most unique flavour experiences.
And trying it back to the very root of this thread. A random, generic café that charges 8$ for a single shot espresso, does not need to do that because the cost of beans is killing them. The cost of beans is essentially nothing, unless you are a one-in-a-thousand speciality coffe house.
I really don't agree with that. $20/kg of coffee is quite cheap, at least in the US. Maybe Sweden has wildly cheaper coffee prices, but I doubt that.
$20/kg equates to roughly $6.80 per 12oz, which is below the bottom end of coffee prices you can find in a store if you're buying 12oz bags.
A normal 'specialty' coffee costs at least $14/12oz (or, ~$40/kg). That coffee is nothing particularly extraordinary. In car analogies, that would be the equivalent of a low-end Lexus or Mercedes.
Stepping to twice the price of the low-cost beans is my definition of premium. Like going from a 30k Fiat to a 60k Alfa Romeo.
Your definition of premium isn’t based in reality, though. It’s more equivalent to going from a $5000 motorcycle to a $10000 used car, to continue straining the car analogy.
If the $86/bag coffee is the equivalent of a Ferrari, then scaling down by the same amount would be your $60k car. Which would be like paying $14/bag (for 12 oz of coffee).
There are lots of local roasters but I'm a little bit too introverted to make friends that easily.
I think making an electronically controlled hot air roaster and just roasting at home is less effort than what you suggest. ;)
Don’t drink coffee. It’s that easy.
Good. Farmers are criminally under-paid when people doing nothing productive in the economy are getting paid for their annoyances. It is time the system gets a reset.
Sure, but to drive an increase of that amount using coffee bean prices alone requires coffee beans to double in price.
The majority of that $6 coffee you are buying at a cafe is non-bean costs. IOW, of that $6 coffee, maybe $1 worth of beans are used.
(If, like me, you drink only black coffee with no sugar or milk or flavouring added, you will also experience the frustration of paying almost the same as everyone else who is buying some flavoured coffee)
It does kinda show how markets don't just magically hit an equilibrium price. The prices went up due to limited supply, but then the sellers couldn't sell at those higher prices. Negotiations over price aren't going fast and buyers are only buying what they can immediately use/sell.
(But I’m not someone who knows better)
Then American regulators started handing exceptions to allowable market participants out like candy and suddenly the markets are majoritarily financial middlemen who do not want to take delivery.
Futures markets make lots of sense and are very useful. How they are currently constituted does not.
There's lot of research on situations where market prices fail to work, but not much (as far as I'm aware) of when they largely work, but there are times when the market seizes up (and how to avoid such situations). or do the risk of such situations are so great that a product should not a be allowed to have a truly "free" market. e.g. petroleum.
>markets don't just magically hit an equilibrium price
markets do magically, and quickly, hit a "market clearing price" where all the bids and asks that match are executed. the market can also slow when there are plenty of bids and asks but they are too far apart.
an "equilibrium price" seems to imply some sort of stability, but when the future is uncertain, prices will be uncertain, without implying a market failure. there can be "information failures" that steer prices wrong, but prices can be uncertain just the same even given all current information.
How is that even possible?
> It does kinda show how markets don't just magically hit an equilibrium price.
Generally, markets do "magically" hit that.
Can you explain why, at the moment demand dried up at the higher price, the suppliers didn't immediately drop the price to meet demand? That's generally how these things work.
Unless there's some kind of cartel operation at play here. In which that's to blame, not the market.
Can you provide any links with greater detail?
Seems to me the bigger magical leap here is in the observer who considers this to be either desirable or necessary.
It’s not an efficient (let alone moral) distribution system if one of its outcomes is spiraling prices that are irreflective of genuine market demand.
The whole problem highlighted here is that the people who want to sell cannot sell because the buyers don’t want to eat their consequences and man up to the loss on their gambling.
https://www.ice.com/products/15/Coffee-C-Futures
My take:
Futures traders decided the price would go up 70%, and were very wrong. This led to the standard “C” contract (set by the ICE exchange) price being too high, tanking demand. If you want to participate in the futures market, you need to have a license you get from the exchange.
I’m sure some producers will try to bypass the exchange market that manages all that, but, ultimately, someone will have to lose a bunch of money. It’ll either be the traders (futures contracts end up being worthless) or the producers (coffee ends up rotting or being refused by the silo).
The article suggests it’s the latter, which makes me wonder how powerful the exchange is, and what happens if you just start freighting bags of coffee around.
That's not how exchanges generally operate. They generally simply match supply and demand.
An exchange setting prices is the literal opposite of a free marketplace. Is this more of a cartel, like OPEC?
If that’s happening here, that’d explain how we can be in a situation where the (1) retailers want to buy coffee, but can’t afford the newly hiked price, (2) the producers are sitting on unsold inventory that they can’t discount, and, simultaneously (3) there’s a glut of distribution capacity and things like silos are sitting empty and going bankrupt.
Per NASDAQ:
> Below-normal rain in Brazil has heightened coffee crop concerns and is supporting coffee prices after Somar Meteorologia reported Monday that Brazil's biggest arabica coffee growing area of Minas Gerais received 12.4 mm of rain last week, or 20% of the historical average. Brazil is the world's biggest arabica coffee growing country.
One factor sometimes mentioned in addition to the bad harvest, is the rise in coffee consumption in China having an definitive impact on the market.
I combine 50% traditional coffee beans with 50% coffee alternative made from locally produced beans in my espresso machine.
The blend works so well that I have no desire to return to using 100% regular coffee beans.
I maintain the 50/50 ratio because real coffee provides an incredible aroma that I don't want to give up (for now).
What is Coffee Free Coffee made of?
Our blends consist of a mix of roasted cereals, legumes, roots and fruits.
The filter blend is made of roasted lupin, barley, chickpeas, chicory, natural aroma, dried black currant, citric acid and caffeine. The decaf version does not contain caffeine.
The capsules variant is made of roasted lupin, barley, fig, chickpeas, chicory, natural aroma, dried black currant and caffeine. The decaf version does not contain any caffeine.
The espresso is made of roasted lupin, fig, chicory, chickpea, natural aroma, caffeine, citric acid and baking soda. The decaf version does not contain any caffeine.
https://northern-wonder.com/pages/faq
(If anyone from the company happens to be reading, I'll mention that my first attempt involved following the link from the front page to "Discover More", but this currently leads to a 404 Page Not Found)
Fascinating.
yes, and North Korea's, and Rusia's, and Iran's... /s
They usually only 'go bad' in that they tend to lose flavor and punchiness over time for most home storage. For warehouse storage in jute bags, they tend to get a 'baggy' flavor eventually which is unpleasant.
At my consumption level so far the price changes haven't been a big deal. It could be that high end beans haven't been as affected - or maybe that was the 'brutal' price hike.
That's surprising to me, considering that coffee is quite addictive. Will consumers really stop drinking it if it gets too expensive? Is there a really a strong correlation between coffee production price and the amount sold to end consumers?
As for caffeine, there are cheaper alternatives to coffee if you just want the caffeine.
I hope someone can authoritatively answer the correlation question.
I'm not sure that it really is. You can build a physical dependence to caffeine, but in my experience there's no mentally addictive component. For a period of time I drank a lot of coffee and then stopped cold turkey, and the only effect was a couple days of physical unpleasantness. I now limit my coffee consumption to a max of one cup per day, and have no issues switching between coffee/decaf/no coffee on any particular day or for any arbitrary period of time.
https://en.wikipedia.org/wiki/Caffeine#Addiction Actually no, it's not considered addictive. Yes, anecdotally you will find people that say they're addictive. Pick almost any subject and you can find someone that says they're addicted to it.
There are withdrawal symptoms, but dependency and withdrawal are defined differently than addiction. https://en.wikipedia.org/wiki/Caffeine#Dependence_and_withdr...
Coffee Prices Are at a 50-Year High. Producers Aren’t Celebrating.
https://www.nytimes.com/2025/02/22/business/coffee-prices-cl...
We have seen this with cocoa.
Are there any journalists left ? /s
The same joke was last year regarding cocoa. /s