Key takeaways
- Coffee prices have hit record highs over the last few years
- Prices are now declining, but still remain elevated. And their direction of travel is far from certain
- Companies need to adapt new ways of thinking about their coffee supply chain as uncertainties around tariffs, supply chain costs and EUDR continue to disrupt the industry
Coffee prices have hit record highs over the last few years. The world’s largest producers of coffee, Brazil and Vietnam, were hit by bad weather: meaning reduced harvests, reduced supply and higher prices.
Coffee prices have now started to fall from the highs seen last year: but still remain highly elevated.
And what happens next is far from certain.
Will coffee follow cocoa?
One scenario is that coffee prices fall dramatically in the coming months. That’s because crops in large coffee producing nations like Brazil are looking much healthier than before: leading to increased supply.
Brazil’s crop forecast for 2026-2027 has been raised: up 17.1% year-on-year, thanks to improved weather and regular rainfall.
It’s easy to trace a scenario where coffee follows in the footsteps of cocoa: prices soared in 2025 but then fell again as crops improved and a surplus reshaped the market.
But the story isn’t that simple. Cocoa prices have since started to edge up again as the market corrected itself and inflationary pressures started to bite.
The complications of 2026
As with all commodities, there are rules of supply and demand which shape the market, and natural market corrections which occur when prices peak or fall dramatically.
But the coffee market is particularly complex and there are many global and local factors at play.
Coffee has a particularly intricate supply chain. Much of the world’s coffee is grown by smallholders: meaning local conditions, rules and regulations can shape production very differently.
Weather events can change fortunes of coffee growers at any moment, putting harvests at risk, and these conditions are impossible to predict.
In Vietnam, for example, while the coffee outlook may have improved: the market still remains highly volatile. Here, a shift in infrastructure and planning is causing more and more coffee farmers to sell their plantations and turn to alternative sources of income.
Then there’s the uncertainty around tariffs; and the cost of supply and transportation which is affected by oil prices and the status of the Strait of Hormuz.
Then there’s the question of stock. While supplies of coffee may have improved thanks to bumper harvests, inventory of coffee is not necessarily in the right place: and the cost and logistics of getting coffee from A to B is not straight-forward.
And EUDR regulation adds another complication for many coffee businesses.
Navigating uncertainty
Coffee companies have various tools at their disposal for dealing with such uncertainty. Hedging has been a key tool: allowing coffee companies to smooth out the highs and lows.
But hedging can only do so much: companies such as Nestle and KDP have taken a hit from high coffee prices in 2026.
One option is to pass costs onto consumers. But this raises another challenge: as much as consumers love coffee, they’re also facing cost-of-living challenges and there’s a question mark over how much they can absorb price increases.
Resilience and agility in the new normal
So how can coffee companies navigate these complexities?
Oliver Broster, senior analyst, coffee analysis at Expana, says that companies have to adapt a new way of thinking and responding.
“This shift in global trade normality is happening before our eyes,” he said, adding that, after years of disruption and reduced stocks, the category doesn’t have the same resilience it showed in the past.
And companies need to be more agile than the traditional models of the past. Coffee markets and prices are changing rapidly and unpredictably.
“In the environment we’ve had - and going forward - you have to be more of a speed boat than an oil tanker,” he said. “Things are changing the whole time, so you need to be able to adjust and move with the market.”
It’s also going to be about having accurate, up-to-date data, he added. And perhaps most importantly, it’s going to be about knowing how to interpret it correctly: knowing which events are going to be a short-term blip and which could have long-term consequences.
