Increased temperatures and unpredictable weather patterns caused by climate change result in higher costs for coffee production, making the popular beverage more expensive.
With a vibrant lavender-purple hairdo bouncing about, Reneé Colón balances on a rickety stepladder inside a borrowed space of a warehouse. She's carefully poured Brazilian coffee beans into her creaky old roasting contraption.
These beans are precious – they've managed to survive a severe drought during a year when environmental conditions aggressively conquered America's beloved morning brew, nearly tripling the cost of raw beans in just a matter of months.
"Unfortunately, coffee's becoming harder to come by," Reneé tells me, the founder and roaster at Fuego Coffee Roasters. "Watching the destruction of the Brazilian crop is a stark example."
The devastation in Brazil and Vietnam, the world's top coffee growers, has slashed production forecasts. Nevertheless, global production is still predicted to rise, but not as much as enthusiastic investors had anticipated. The result? Coffee prices skyrocketing, primarily due to insatiable demand from Europe, the US, and China.
Prices peaked in February but have remained high, leaving Reneé pondering if she should swallow the cost or pass it on to her customers.
The beans Reneé was roasting cost her $5.50 per pound in early March, more than double what they cost in September. And that was for midrange beans. Specialty coffees – with their sensitivity to delicate climates and slow growth for enhanced flavor – can set you back even more.
Donald Trump's current 10% tariffs blanket most coffee-producing countries, including Brazil, Ethiopia, and Colombia. These duties are expected to savage Americans' wallets. In the midst of madcap tariff statements – at one point he threatened 46% tariffs on Vietnam imports and 32% on Indonesia imports, then called them off – coffee roasters like Reneé are rethinking their supply chains.
"Maybe we should just grow our own damn coffee farm," Reneé contemplates, ruling out rural New York as the optimal climate for growing the crop exists near the equator, where seasons are long and the air is cool at high altitudes. Puerto Rico, with its connections to Reneé and her husband, is also not a viable option due to high labor costs and escalating hurricane risks.
She shrugs off the idea of procuring coffee from Hawaii and California, claiming it to be either poor quality, overpriced, or both.
In February, global coffee exports plummeted by 14.2% compared to the previous year, according to the International Coffee Organization's market report. The scarcity sent raw coffee prices to their highest point ever that month, outdoing the record set back in 1977 when severe frost obliterated 70% of Brazil's coffee plants.
Price hikes aren't solely due to climate issues. Inflation is pushing up the cost of labor, fertilizers, and borrowing, asserted Daria Whalen, a buyer for San Francisco-based Ritual Coffee Roasters.
In Mexico, Daria struggled in April to finalize contracts amidst Trump's constant tariff vacillations, reminding her of the chaos in Colombia the previous month when Trump made and then revoked threats that could have impacted local coffee markets.
"It felt like a roller coaster ride – at the end of the day, the tariffs didn't exist," Daria recalls.
Some of the boost in coffee prices might stem from importers stockpiling beans in anticipation of tariffs. Reneé believes prices will continue to climb as import taxes are paid. And with consumer confidence reaching a 12-year low, Reneé could see a decrease in demand for her high-end coffee.
"It's tough on us because the prices rise, it's tough on the consumer because they have to pay more, and it's tough on the farmers because they could experience severe losses," Reneé said.
Despite the challenges, Reneé isn't backing down. In December, she and her husband took out a $50,000 loan to buy a turbo-charged coffee roaster from Turkey, aiming to triple her production capacity. She's also trying to increase sales by onboarding new wholesale clients, hawking beans-of-the-month-style subscriptions, and raising the wholesale price of a pound of roasted coffee by 25 cents.
At one of her retail locations, called Melo, one couple swears they don't check the coffee's price on the receipt. For them, it's a little piece of luxury.
"We know we could find cheaper coffee elsewhere," says Rob Newell, a high school biology teacher, while cooing over his infant daughter alongside his wife, another teacher. "Maybe it's just because we're new parents, but it gets kind of monotonous staying at home all day."
Reneeé is also focusing on cutting costs. She's considering storing more raw beans in the warehouse to spare expenses on storage in port cities. She's been building relationships with farmers to sidestep price spikes and control bean quality, and she describes working with a farmer in Colombia as coffee prices were skyrocketing in February when she locked in a one-year contract to avoid the worst of the jump.
And like many small business owners, she's had to get the hang of negotiating tariffs.
In January, she turned down an offer from a Montreal coffee importer who proposed importing through their warehouse to save money due to a strong Canadian dollar. She feared tariffs on Canada could drive up costs. Plus, crossing an extra border risks delays. The value of the dollar has been fluctuating wildly.
"I'd rather have things be less complicated instead of more," Reneé explains.
- The devastation in Brazil and Vietnam, the world's top coffee growers, has slashed production forecasts, leading to global production still predicted to rise but not as much as enthusiastic investors had anticipated.
- The result of this reduced production is coffee prices skyrocketing, primarily due to insatiable demand from Europe, the US, and China.
- These high coffee prices are causing challenges for businesses like Fuego Coffee Roasters, with beans potentially costing more than double what they did in September.
- The current 10% tariffs blanket most coffee-producing countries, including Brazil, Ethiopia, and Colombia, and are expected to impact Americans' wallets.
- Inflation is also pushing up the cost of labor, fertilizers, and borrowing, further contributing to the rise in coffee prices.
- The high cost of coffee is affecting not just businesses but also consumers, with some consumers viewing premium coffee as a little piece of luxury despite the higher prices.
- Some farmers could experience severe losses due to the rising costs of production and potential decreases in demand from consumers.
- To cope with these challenges, Reneé is trying various strategies such as increasing production capacity, onboarding new wholesale clients, and raised wholesale prices.
- Reneé is also focusing on cutting costs where possible, like storing more raw beans in the warehouse and building relationships with farmers to avoid price spikes and control bean quality.
