Understanding the Global Coffee Market

Coffee is the second most traded commodity in the world after oil, and its price is influenced by a complex set of factors, including climate, global supply chains, economic conditions, and geopolitical events. Let’s break down what’s happening in more detail.

1. Climate Change & Extreme Weather Disruptions

The majority of the world’s coffee is produced in the ‘Coffee Belt,’ a region spanning Latin America, Africa, and Asia, where stable climatic conditions are crucial for successful harvests. However, recent years have seen a series of extreme weather events that have significantly impacted production:

• Brazil, the world’s largest coffee producer, experienced severe drought followed by unexpected frosts in 2024. These extreme weather conditions led to a 20% drop in production, reducing global supply.

• Vietnam, a major robusta coffee producer, has suffered heavy rains and flooding, damaging crops and delaying shipments.

• Colombia, a renowned producer of high-quality arabica coffee, has also faced irregular rainfall patterns, leading to inconsistent yields and lower overall production.

The result? A global shortage of coffee beans, which naturally pushes up prices. (Source: The Guardian)

2. Supply Chain Challenges and Rising Costs of Transportation

Even when coffee beans make it through difficult growing conditions, they still need to be transported across the world. In the past two years, global supply chains have been under enormous strain due to:

• Port Congestion: Major shipping ports have been overwhelmed, causing long delays in exporting green coffee beans.

• Container Shortages: A global shortage of shipping containers has increased freight costs significantly.

• Rising Fuel Costs: The cost of fuel has surged, making transportation more expensive for importers and exporters alike.

The increased logistical costs inevitably add to the final price of coffee. (Source: Reuters)

3. Coffee Trading & Market Speculation

Coffee prices are largely determined by the global commodities market, where traders speculate on future supply and demand. In 2024, several key changes occurred:

• The Intercontinental Exchange (ICE), where coffee futures are traded, increased trading margins by 10%.

• The price of arabica coffee surged by over 70% in the past year, reaching some of the highest levels seen in decades.

• Speculative trading has added volatility to the market, meaning that coffee roasters are paying significantly more for green coffee beans than they were a year ago.

4. Inflation, VAT & Rising Operational Costs

Like many other businesses, coffee shops and roasters have been affected by rising costs across the board. Inflation has increased the price of essential goods, including:

• Milk & Other Ingredients: Dairy prices have risen sharply, affecting the cost of milk-based drinks like lattes and cappuccinos.

• Energy Bills: The cost of running coffee roasters and café equipment has gone up significantly.

• Wages: The minimum and living wage have risen dramatically in recent years, increasing payroll costs for small businesses like ours.

• VAT & Corporation Tax: As both a hospitality business and a coffee roaster, we face substantial tax burdens that significantly impact our ability to remain sustainable. VAT is charged at 20% on most sales, meaning a large portion of revenue is immediately taken as tax, limiting what we can reinvest into our business. We can reclaim VAT on very few purchases, which makes the overall tax structure even more challenging for small businesses like ours. Additionally, the recent corporation tax increase to 25% has further reduced already tight margins, making it increasingly difficult for independent businesses to stay viable. Unlike larger corporations that benefit from economies of scale or financial buffers, small businesses like ours absorb the impact more directly, adding to the financial strain brought on by rising operational costs.

These factors, combined with increasing supplier costs, mean that cafés and roasters are under greater financial pressure than ever before. According to industry reports, coffee businesses worldwide are seeing an average cost increase of 20-30% across all operations. (Source: The Guardian)

What Does This Mean for Us and You?

At The Curator, we have always been committed to sourcing high-quality, ethically produced coffee while ensuring fair pay for farmers, staff, and suppliers.

We have no choice but to adjust our pricing to reflect the realities of the current coffee market. We have worked hard to balance rising costs without passing the full burden onto our customers, absorbing as much of the increase as possible. However, continued absorption of these costs affects our ability to operate sustainably and secure the future of our company. As of March 2025, we will be adjusting our pricing in both our cafe and retail coffee offerings. This decision allows us to continue providing the same level of quality, sustainability, and service that we take pride in.

We want to assure you that we remain dedicated to:

• Sourcing the best coffee: We work directly with importers who prioritise fair pay for farmers and sustainable growing practices.

• Maintaining our high roasting standards: Our wood roasting process remains the same, ensuring our coffee retains its signature depth of flavour.

• Being transparent: We believe in keeping our community informed, which is why we’re sharing this detailed explanation.

We deeply appreciate your continued support. By choosing independent coffee roasters like us, you are supporting a more sustainable and ethical coffee industry.

For further reading, here are some additional resources:

• Coffee Price Trends - Beverage Daily

• Why Coffee Prices Are Soaring - Reuters

If you have any questions, feel free to ask in-store or contact us.

Thank You for Supporting Independent Coffee.