A perfect storm of climate disruption, supply shortages, and market tension is brewing trouble in the global coffee industry. As arabica bean prices soar, major roasters are pushing double-digit price hikes through to retailers – and ultimately, to consumers.

Across Europe, North America, and Brazil, negotiations between top roasters and supermarket chains have stalled or intensified. Brands such as Lavazza, Illy, Nestlé, and JDE Peet’s are in talks to raise coffee prices by up to 25%, citing a near-doubling of arabica prices over the past year. JDE Peet’s, for instance, has now concluded 90% of its global price negotiations, but not without disruption – Albert Heijn, the Netherlands’ largest supermarket, temporarily ran out of key coffee products during stalled talks, as reported by Coffee Talk.

The cause? Four successive years of arabica bean supply deficits, driven by extreme weather in Brazil, Vietnam, and Indonesia — countries responsible for nearly half the world’s coffee output. According to the Wall Street Breakfast Podcast, droughts and erratic rainfall have destabilised production, pushing global arabica prices up 70% in 2024, with an additional 20% rise in early 2025. As Reg Watson of ING notes, the resulting consumer-facing price hikes could be as high as 28%.

This price volatility is already impacting consumer behaviour. International Communicaffe reports that coffee sales volumes in Europe and North America dropped 3.8% last year, even with a relatively modest 4.6% price increase. With steeper increases expected in 2025, more significant volume declines appear inevitable. At the same time, private-label and supermarket-owned coffee brands are growing their market share, jumping 13% in the U.S. since 2021.

The strain is also evident in Brazil, where retail coffee prices have soared 40%, prompting behavioural shifts such as rationing and reducing household waste. Brazilian roaster 3 Coracoes has raised prices three times in as many months – a sign of how rapidly input costs are climbing.

This sustained rise in coffee prices is more than a short-term market spike – it’s a strategic reckoning for beverage businesses. For brands, the key challenge lies in navigating shrinking margins while retaining consumer loyalty in a price-sensitive environment. Meanwhile, retailers must weigh affordability against availability, as disruptions lead to empty shelves and fractured brand relationships.

For beverage producers beyond coffee, the message is clear: supply chain resilience and commodity risk management must become central pillars of strategy. Volatile input costs are no longer limited to niche commodities – they’re now capable of shifting mass-market behaviour across continents.

With futures markets reacting to forecasted rainfall in Brazil, there’s cautious hope for stabilisation – but no guarantees. Companies should prepare for continued volatility and closely monitor weather, currency trends, and consumer sentiment. For beverage stakeholders, now is the time to review pricing strategies, diversify supplier relationships, and invest in consumer insight. The coffee crunch may just be the start.