The coffee market has been defined by high prices over the last few years. The world’s largest producers of coffee – Brazil and Vietnam – were hit by bad weather, leading to reduced harvests and, consequently, higher prices.
Coffee prices reached record highs in 2025: before starting to fall. And prices have continued to fluctuate since then.
So what’s next?
Coffee price crash
Many coffee experts now project that coffee prices will crash in the coming months, following the trajectory of cocoa.
The primary factor is supply. Brazil’s crop forecast for 2026-2027 has been raised: up 17.1% year-on-year, thanks to improved weather and regular rainfall. So has Vietnam’s production outlook.
There’s been a sharp change in fortunes. Whereas consecutive years of production deficits created a huge shortfall and pressure on supply, the picture has flipped and now a significant global surplus is expected.
Coffee prices are now expected to reach around $2 per pound over the next couple of months: down from their all time high of $4.40 in February 2025.
Will consumers pay a premium - or not?
For big coffee companies such as JDE Peet’s, Keurig Dr Pepper and Nestle, high coffee prices have been a headache over the past year.
Keurig Dr Pepper’s coffee sales only edged up 0.6% in 2025 to $4bn, with high coffee prices and tariff impacts weighing down the division. In its FY2025 earnings call last month, Keurig Dr Pepper said it expects to see these challenges ease over the year.
Meanwhile, Nestle noted that high coffee prices had affected gross margins, with the biggest impact in the second half of 2025.
And Philipp Navratil, Nestle’s CEO, highlighted another potential problem for the category: however much they love coffee, they’re also facing cost-of-living challenges. And, despite its premium positioning, consumers are not necessarily staying with the category when prices rise too high.
His answer is a coffee portfolio that covers several price points: from premium powerhouse Nespresso to the more affordable Nescafe.
“There is clearly a consumer that prefers quality and trades up,” he said. “And we see that especially in Nespresso, which is a good example.
“But there is obviously the consumer, and more and more of these consumers, that have a stretched budget and they’re looking for value more and more.”
Why is coffee still expensive for consumers?
While coffee prices are falling, consumers are still paying high prices for their daily cup of joe.
That's because it takes some time for the reduction in prices to trickle through supply chains and back through to consumers - around nine months.
Iran conflict
Another factor is the conflict in Iran. While coffee production is centered in Latin America (primarily Brazil) and Asia (primarily Vietnam) and away from the conflict zone, knock-on effects are possible.
“A lot of the reason that coffee prices have been dropping since last summer is the predicted bigger coffee crops coming out of South America and Vietnam and that macro theme is unlikely to be impacted by the situation in the Gulf,” said Stephen Butler, CCO of commodities forecaster ChAI.
“But the Iran conflict might have a short term impact on Asian supplies, both from a logistics perspective due to rising shipping and transport costs and longer journey times, for example, as well as potentially higher fuel costs for Asian coffee growers.”
Other impacts on coffee pricing
The EU’s Regulation on Deforestation-free Products (EUDR) presents producers and brands with compliance challenges.
Coffee has also been in the firing line of US tariffs: tariffs were initially introduced on Brazil and Colombia before coffee gained an exemption.
