The 3 reasons why coffee prices are rising

Coffee Menu board pricing

From the price of fuel to lettuce shortages at KFC, the cost of living in 2022 is officially crazy.

Now I’m no economist, but I can help give you some background on why the price of a cup of coffee (and a bag of coffee beans) is rising faster than ever before:

The cost of raw coffee has almost doubled

Brazil produces over 35% of the world’s coffee, so when the weather’s not great in Brazil, this causes problems for the whole coffee industry.

…and you guessed it – the weather has not been great for growing coffee.

A combination of drought & frost in Brazil meant that they produced a lot less coffee than expected in 2021. In turn, this contributed to the lowest global coffee reserves in more than two decades.

From there, the formula is painfully simple – when there’s less coffee, and plenty of people want it – prices go up.

In this case, global coffee prices have almost doubled over the last 12 months, with prices on higher quality Arabica coffees (i.e. the stuff we buy) has increased even further.

raw coffee prices chart

International Coffee Prices over the last 12 months

Covid + War = higher freight costs

Higher freight costs don’t just affect coffee, it’s one of the key reasons prices are going up across the board.

Ongoing Covid lockdowns in China have seriously backed up the global supply chain, meaning that products (like coffee) can’t get where they need to go.

And as strange as it seems – the war in Ukraine is also contributing to higher food & fuel prices around the world – including here in Australia.

All of this means it costs more to move things around, which equals higher prices on well…just about everything

The hospitality industry is still struggling to find workers

When Covid restrictions lifted in late 2021, everyone was understandably keen to get back to cafes & restaurants after being locked at home for over a year.

The problem is, there simply aren’t enough workers to cook food, wait tables & make coffee.

The shortages are driven by a combination of two factors:

  1. Many hospitality workers left the industry during Covid and haven’t come back
  2. the gap left by international students & backpackers

The end result is that hospitality jobs ads are at a 2 year high, and businesses are offering more money to attract available staff.

Of course, higher wages are better for workers – but it also means that menu prices need to increase to pay for it.

For our part, while we can’t control global factors like these, we know that quality is still worth paying for.

By continuing to choose quality coffee, we can better support the people who grow coffee, and continue to help grow the businesses that serve coffee.

Ben Irvine
From owner / operator of his own coffee business, to product development for a coffee multinational, to consulting with independent cafe owners, Ben has been involved across a wide range of the industry over the last 20 years. When he isn’t brewing coffee, or writing about it, Ben is likely to be annoying his kids with 90’s music trivia.