Why Coffee Pricing is Increasing: Challenges Facing Independent Coffee Roasters

The coffee industry is currently experiencing a significant rise in pricing, driven by various factors that are impacting both the supply chain and the quality of coffee available in the market. Let's explore the reasons behind the increasing prices and the challenges that coffee roasters like Sacred Grounds is currently facing, particularly in the realms of specialty grade, fair trade, and organic coffee.

Factors Contributing to Rising Coffee Prices

1. **Weather** Weather has had a profound impact on coffee production, leading to unpredictable patterns, increased pest and disease prevalence and reduced yields. Specialty grade coffee, which requires specific growing conditions, is particularly vulnerable. As farmers face these challenges, the cost of production rises, ultimately affecting prices.

2. **Supply Chain Disruptions** Ever since the COVID-19 pandemic we have seen significant disruptions in the global supply chain, affecting everything from transportation to labor availability. Roasters are facing delays in sourcing beans, which can lead to increased costs. Additionally, logistics challenges have resulted in higher shipping fees, further driving up prices.

3. **Increased Demand for Specialty Grade, Organic and Ethical Coffee** There has been a surge in demand for specialty grade, fair trade and organic coffee as consumers become more conscious of quality and ethical sourcing. This trend often leads to higher prices due to the meticulous processes involved in producing and certifying these types of coffee.

Some Of The Challenges Facing Coffee Roasters

1. **Cost of Sourcing Quality Beans** Coffee roasters like us are finding it increasingly challenging to source high-quality specialty beans at reasonable prices. The competition for these beans has intensified, making it difficult for smaller roasters to compete with larger companies that have way more purchasing power.

2. **Maintaining Fair Trade Practices** Fair trade certification ensures that farmers receive a fair price for their coffee, but this can also mean higher costs for roasters. Balancing the need to support ethical practices while managing profit margins is a significant challenge for many roasters.

3. **Consumer Expectations** Today's coffee consumers expect high-quality products that are also ethically sourced. This places pressure on roasters to maintain quality while navigating rising costs. Meeting these expectations can be challenging, especially when prices are fluctuating.

What is Currently Causing Market Prices To Spike?

At the most basic level, it always comes down to supply and demand. Commodity speculators closely monitor production from countries like Brazil, Colombia, and Vietnam to see if output will meet global demand. If the outlook points to a supply shortfall, prices rise. Currently, December contracts are trending below expectations, which is pushing prices higher.

Other contributing factors include higher shipping costs, volatile global fuel prices, container shortages, and labor shortages.

But What About Tariffs?

Politics aside, tariffs add, on average, about 10% to raw coffee pricing at origin. While this does impact costs, it’s not nearly as significant as the current open-market spike—except in the case of Brazilian coffee, which remains uncertain. The Commerce Secretary and the current administration recently announced that coffee may be exempted from tariffs in the near future. We hope sooner rather than later!

What are WE doing about it?

We want to be upfront and honest: we have to continually make modest adjustments to bulk coffee pricing. To be clear, we are absorbing much of the impact by reducing our typical margin in the short term, but these price increases are necessary to keep us afloat until stability returns to the C market. When our costs go down—and they will eventually—we’ll pass those savings back to you.

So Where Does That Leave Us?

As we navigate the complexities of sourcing specialty grade, fair trade and organic coffee, the need for sustainable practices and quality assurance remains top of mind for us. We will never compromise on our quality. Understanding these dynamics and communicating them hopefully helps our customers appreciate the value of their coffee and the efforts that go into bringing it to their cup.

-- John

Sustainable coffee farm promoting future resilience