The global coffee industry is facing an unprecedented price surge currently, and like many coffee roasters around the world, Australian coffee roasters are feeling the impact. Over the past year, the cost of green coffee beans has risen significantly (up 80%) due to several key factors, directly influencing the price of roasted coffee for wholesale businesses and consumers alike.
Why Are Coffee Prices Increasing?
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Climate Conditions & Supply Chain Disruptions
Brazil, the world’s largest coffee producer (accounting for 40% of coffee exports), has experienced extreme weather events, including firstly frost and more recently droughts, affecting harvest yields for the 2025 crop. Similarly, Vietnam and India (which account for almost 50% of the world's Robusta exports) have both experienced adverse weather conditions during 2024/2025. Additionally, logistical challenges such as rising freight costs due to container shortages, port congestions and supply chain disruptions due to political unrest have compounded the issue. -
Rising Global Demand
As specialty coffee gains popularity worldwide, the demand for high-quality coffee continues to outstrip supply. Countries with emerging coffee cultures, such as China and parts of Southeast Asia, are contributing significantly to this increased demand. As disposable incomes rise and coffee consumption habits evolve in these regions, there has been a notable shift from instant and lower-quality coffee towards premium specialty coffee. This growing consumer base is placing additional pressure on global coffee supplies, further driving up prices. Additionally, established coffee-consuming nations such as the United States and European countries are also seeing sustained demand for high-quality coffee, intensifying competition for limited supplies.
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Currency Fluctuations & Market Speculation
The Australian dollar’s performance against the US dollar (the currency in which coffee is traded) has also influenced local prices. A weaker Australian to US dollar means higher costs for imported coffee, as roasters must pay more in local currency to secure their supply. Conversely, fluctuations in the exchange rate can create uncertainty in pricing, making it difficult for businesses to plan ahead. Additionally, market speculation and hedge fund investments in coffee futures have further driven volatility in pricing. Investors often react to weather conditions, geopolitical events, and economic forecasts, which can lead to sudden price swings. This speculation exacerbates price instability, adding further pressure on coffee roasters trying to manage costs. The AUD/USD steadily declined over the back half of 2024, down 10% from September 2024 to January 2025.
The Coffee Market and Specialty Pricing
Coffee is traded on the global market as a commodity, with arabica prices primarily influenced by the Coffee Futures Contract (CFD) on the Intercontinental Exchange (ICE). This contract serves as a benchmark for commodity coffee pricing worldwide. As commodity coffee prices rise, specialty coffee — typically priced at a premium above the commodity rate — also sees an increase. The gap between commodity and specialty coffee pricing is dictated by quality differentials determined at origin, but when the base price of commodity coffee spikes, specialty coffee inevitably follows suit, impacting both roasters and consumers.
How This Affects Australian Coffee Roasters & Cafe's
For Australian roasters, the rising cost of green coffee beans is driving up both production and operational expenses, influencing everything from bean procurement and storage to wholesale pricing and client management. Roasters must find a balance between absorbing some of these costs, tweaking blend compositions or origins, or passing on price increases to customers. A mix of these strategies appears to be the most practical solution.
Cafés across Australia also need to adapt to shifting market conditions. To sustain quality coffee offerings, prices must increase—not just to account for higher bean costs but also because Australian coffee prices remain below global standards. To manage this transition effectively:
- Introduce price adjustments incrementally: If a small flat white is still priced under $5.50, consider raising it (along with your other sizes) in small steps, such as $0.25c increases per quarter/6 months, to avoid sudden significant price shocks.
- Maintain quality over cost-cutting: Lowering quality to reduce expenses is rarely a winning strategy. Customers return for great coffee, not a marginally cheaper, but subpar cup.
- Be transparent with customers: Open communication about price adjustments helps build trust, especially when consumers understand the broader economic pressures affecting the industry.
There have been some misleading news articles lately quoting that coffee prices will be increasing to $10/cup. To put it in context, a $5/kg increase from a coffee roaster can be covered by a cafe raising its 12oz regular cup of coffee by ~$0.12c. So, if you are an end consumer, when your local cafe puts up pricing by $0.50 - $1.00 / cup this year, please be kind, support local and remember they are doing this to keep their business viable and cover all of the other expenses (think rent, electricity, milk, insurance) that have also increased significantly in the last 12 months. Without a pricing re-alignment similar to the above in the near future, your list of local cafes will unfortunately start to diminish.
By thoughtfully adjusting pricing, staying committed to quality, and fostering customer trust, both roasters and cafés can navigate these cost challenges while continuing to deliver high quality coffee experiences.
What’s Next?
With continued uncertainty in global markets and supply chains, coffee roasters need to stay agile. Strategies such as diversifying sourcing regions, adjusting future pricing structures, and educating wholesale customers and end consumers on the value of specialty coffee will be key to navigating these price increases.
For coffee lovers, this shift underscores the importance of supporting local roasters and cafes who are working hard to maintain quality despite rising costs. While price increases (both roasters and cafes) may be inevitable, the dedication to delivering exceptional coffee and service is still paramount and remains unchanged at Little Owl.
Here at the Owl factory, we're still 100% committed to providing high-quality, sustainably sourced coffee while adapting to these industry challenges.
We appreciate the continued support of our community and wholesale partners as we navigate this evolving landscape and will continue to provide as much information and education on the situation as possible.