There are now several factors at play driving up the cost of coffee, including tariffs, crop failures, rising labor costs and concerns around the war in Iran, wrote The Wall Street Journal in a piece detailing how all of these costs have added up over time. Experts say prices likely won’t come down anytime soon.
“Extreme weather, including droughts in Brazil and Vietnam, [have] hit coffee crops. And even before any tariff increases, hedge-fund bets anticipating the levies were pushing commodity prices higher. Then in July, President Trump slapped an additional 40% tariff on goods from Brazil, which produces more than a third of the world’s coffee, citing legal action against its former President Jair Bolsonaro and U.S. tech firms as justification,” WSJ said.
This led to coffee shops across the country raising the price of retail coffee as many coffee sellers passed on costs to customers. Coffee outpaced other grocery items in the inflation-tracking consumer-price index last year, according to the report.
Coffee commodity prices then began sliding again in November after Trump pulled back the 40% tariff on Brazilian food items, including coffee.
“Another reason commodity prices are surging again? The same speculative trading that contributed to price surges early last year is ramping up again. Back then, traders piled into coffee contracts—betting the price would go up—after an Agriculture Department report warned of a coffee-supply shortage. By February 2025, hedge funds controlled about a third of all coffee contracts—a $10.4 billion bet that helped fuel a surge in the C-price,” WSJ wrote.
As a result, commodity prices have “just been roller coaster stupid,” said Emory University professor Peter Roberts, who developed the Specialty Coffee Retail Price Index. The index tracks prices for roasted coffee sold by about 60 companies in North America, including Starbucks, Stumptown and Peet’s. “Hedge funds are just liking the gamed uncertainty.”
Meanwhile, hedge funds sold off a “big chunk of their positions early in 2026 after Brazilian authorities said they expected a record year in coffee production. Now, surging fuel and freight costs caused by the closure of the Strait of Hormuz have triggered a new round of coffee-contract purchases and rise in commodity coffee prices.”
Hot dispensed beverages generated 8.4% of c-store foodservice sales, a slight decrease from 8.5% in 2023, according to the NACS State of the Industry Report® of 2024 Data. Read more about hot dispensed beverage sales in the September 2025 issue of NACS Magazine feature “Big Business (Still) at the Beverage Bar.”