The Rise in Coffee Prices Fueled by Increasing Global Demand and Supply Crisis

Coffee prices have surged in recent years due to a critical imbalance between supply and demand. U.S. coffee importers have faced rising costs, with import prices climbing 65%. This spike has directly impacted consumers, with ground coffee prices rising by 21% in the past year alone.

Global factors, like severe droughts in Brazil and Vietnam, have disrupted harvests, further stressing the already fragile coffee supply chain. As demand continues to grow, the cost of coffee remains on the rise, making the price of your daily brew higher than ever.

Coffee supply and demand have risen, and their effects will be felt across the industry. Prices are expected to keep climbing, leaving both coffee enthusiasts and professionals searching for answers. Keep reading to discover how these shifts are affecting the market and what they mean for your coffee experience.

Key statistics:

• According to futures contracts in New York, wholesale arabica coffee prices reached a record $4.30 per pound in February 2025, doubling from less than $2 in January 2024.
  
  

• Government data reveals that the retail price of ground coffee soared to an all-time high of $7 per pound in January 2025, marking a 75% increase from $4 in January 2020.

Read: Coffee Consumption and Market Trends in 2025

The Decline of Coffee Imports and Its Growing Impact

From 2007 to 2019, the United States imported around 15% of global coffee, making it a key player in the whole cycle of coffee supply demand. However, between 2019 and 2020, this share decreased from 15.5% to 13.3%. While this may seem like a small change, it resulted in a drop in imported coffee of around 184,707.7 tons.

The pandemic exacerbated this decline. With markets closing and supply chains disrupted, U.S. coffee imports suffered significantly in 2020. This shift in imports impacted the coffee supply demand paradigm, tightening the market further.

Key factors of the rising coffee prices and the ongoing coffee supply & demand:

• U.S. coffee imports fell 10.6% in 2020, affecting the global coffee supply demand cycle.
  
  

• COVID-19 disruptions played a major role in lower imports, impacting the coffee supply demand dynamics.
  
  

• By 2021, U.S. imports saw a modest 2.4% recovery, but still struggled to keep up with global demand.
  
  

• Extreme weather events, along with rising global demand, have intensified the coffee supply demand imbalance, driving prices higher.
  
  

• In August 2024, the price of green coffee hit a 47-year high at $2.39 per pound, clearly reflecting the ongoing coffee supply demand.
  
  

• Supply chain disruptions, along with rising costs for beans, labor, and shipping, are intensifying the coffee’s supply & demand, making it harder to control costs.
  
  

• Prices are rising due to a combination of growing demand, extreme weather, and logistical challenges, all exacerbating the coffee supply demand imbalance.

Despite these declines, the U.S. maintained its position as the world's top coffee importer. However, reduced imports and growing global demand have led to rising coffee prices, as the supply demand imbalance continues to escalate.

Global Coffee Supply Challenges

Global coffee supply disruptions have intensified the coffee supply demand imbalance, leading to rising U.S. coffee prices. 

Brazil, the world's largest coffee producer, faced extreme weather events in 2021, which reduced production and contributed to rising global coffee prices. This disruption further intensified the coffee’s supply & demand.

Colombia, the second-largest coffee exporter to the U.S., experienced significant delays and export backlogs due to political unrest and COVID-19 disruptions. These challenges further stressed the already tight coffee supply & demand cycle.

Vietnam, a major producer of robusta coffee, saw a decline in exports due to COVID-19 restrictions and workforce shortages. Additionally, the country experienced flooding in October 2024, further damaging production and contributing to a nearly 40% year-over-year drop in December exports. 

Indonesia, with its limited infrastructure, faced severe logistical challenges due to the pandemic. Container shortages exacerbated delays in coffee exports, further tightening the coffee supply & demand cycle. 

Geopolitical tensions, such as those in the Red Sea region due to conflict between Israel and Hamas, have disrupted key maritime routes, impacting coffee shipments and driving up costs. These issues added to the global coffee supply constraints and pushed prices higher.

Key factors contributing to the coffee supply demand rise:

• Extreme weather events in Brazil, including droughts, frosts, and floods, reduced production and contributed to a drop in coffee exports in 2024, tightening global supply.
  
  

• Political unrest and COVID-19 disruptions in Colombia led to a 16% drop in coffee exports, further exacerbating the global coffee supply demand imbalance.
  
  

• Vietnam’s workforce shortages due to COVID-19 restrictions further constrained coffee processing and shipping, worsening the coffee supply demand imbalance and contributing to price hikes.
  
  

• Logistical challenges in Indonesia, including container shortages, delayed coffee exports, and added strain to the global supply, driving costs higher.
  
  

• Slowdowns in the Red Sea and the Suez Canal further stressed the global coffee supply. According to the International Coffee Organization, as many as 5 billion bags of coffee had not yet arrived in Europe. 

Additionally, global coffee consumption is increasing, with countries like China seeing a 150% rise in coffee consumption over the past decade, further amplifying the coffee supply & demand uproars. 

Further geopolitical concerns include potential tariffs on coffee exports from Mexico and a new European Union law that requires companies to prove their coffee is not linked to deforestation. These developments are expected to further tighten coffee supplies.

Despite alternative supply sources, U.S. coffee prices have remained high. Ground coffee prices averaged $8.39 per pound in 2023, reflecting the ongoing coffee supply & demand crisis. As global coffee consumption continues to rise, prices are expected to remain elevated due to the supply shortages.

Signs of Hope for the Coffee Drinkers

However, there's some hope for you as a coffee drinker. USDA report suggests that global coffee production is forecast to rebound in 2025, with a 7.1 million bag increase, bringing total production to 176.2 million bags. 

This increase is primarily attributed to a recovery in Brazil's coffee output, which is expected to reach 69.9 million bags, and a rebound in Indonesia's production, projected at 10.9 million bags.

Additionally, the International Coffee Organization (ICO) has reported a 3.3% increase in green coffee exports in July 2024 compared to the same time last year. This signals the first instance of positive growth after a few months of negative trends, suggesting that coffee supply is beginning to catch up with demand. 

For you, this could mean some relief as supply improves and prices start to stabilize. 

While higher coffee prices may persist for a while, the industry is on a path toward recovery. As global production increases, coffee’s supply & demand may gradually ease, and you might see some relief at your local coffee shop or grocery store.

Conclusion

You're likely to continue seeing higher coffee prices until production issues are resolved and global demand stabilizes. With the rising coffee supply & demand, prices are expected to stay elevated, which may prompt you to reconsider your coffee choices. 

It's likely that you'll shift toward more at-home coffee machines & occasions rather than splurging on pricier coffee shop offerings. This change in behavior could open up new opportunities for retail offerings, such as flavored syrups or premium coffee beans, allowing you to elevate your at-home coffee experience.

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FAQs

Q: Is coffee in demand or supply?

A: Coffee demand grows steadily every year, as there is no true substitute for it. In the short term, the supply of coffee becomes the primary factor that affects its prices.

Q: Is there a high demand for coffee?

A. Yes, the global coffee market is expanding rapidly. By 2025, it is expected to reach $96.45 billion in revenue, largely driven by at-home consumption through supermarkets and convenience stores.

Q: Is there a coffee supply shortage?

A: The global coffee supply is becoming increasingly strained as demand continues to rise, particularly in emerging markets like China. Traditionally, a tea-drinking nation, China is shifting towards coffee, exacerbating the supply shortage.

Q: Is the coffee industry growing or declining?

A: The coffee industry is generally growing, despite some regional variations. Global consumption, especially in emerging markets, is increasing, along with the demand for specialty and premium coffee products, fueling industry expansion.

Q: Who supplies the most coffee?

A: Brazil is the largest coffee producer globally, accounting for 38% of the world's coffee production, with 66.4 million 60-kg bags. Other major producers include Vietnam (17%) with 30.1 million bags, Colombia (7%) with 12.9 million bags, and Indonesia (6%) with 10.9 million bags.