How high prices blurred the divide between specialty and commercial coffees

As the C price remains volatile, reaching record highs earlier this year and recently settling below US $3/lb, commercial-grade coffee has taken a significant hit.

According to a new UN FAO report, it will take almost a year for consumers to feel the effects of price spikes, most of which will impact cheaper coffee sold in supermarkets and convenience stores.

Specialty coffee operates outside the C market, but it is heavily influenced by broader market movements. While the price of commercial-grade coffee remains high, comparable to that of specialty coffee, could this create an opportunity for specialty coffee roasters to capture the attention of more customers? 

Or conversely, will more consumers opt for cheaper alternatives, curb their consumption, or stop buying coffee altogether?

I spoke to Albert Scalla at StoneX Group, Friso Miguel Spoor at Koffie Lente, and Sam Klein at Partners Coffee to learn more.

You may also like our article on why it’s never been more important to invest in coffee quality.

Understanding the volatility of coffee prices

The global coffee industry has recently navigated an extended period of high market prices. Over the last two years, green coffee costs have almost doubled, reaching an all-time high of US $4.41/lb in February 2025.

The situation is the result of a number of complex factors, but is primarily driven by ongoing supply shortages in Brazil and Vietnam, the world’s two largest coffee producers. Compounded by historically low global stockpiles, these disruptions in major producing countries have resulted in significant price hikes.

Sensing opportunity in this scarcity, commodity brokers and speculative investors have increasingly bet on continued price appreciation, which has further accelerated market volatility.

In recent weeks, following news of improved weather in Brazil and higher-than-expected harvest forecasts, coffee prices have stabilised just below US $3/lb. Although this is a sharp drop from the record highs seen earlier this year, it’s likely that the C price will remain at these levels – and could rise again.

Tensions in the Middle East remain high, which could impact key shipping routes through the Strait of Hormuz, driving up logistics costs. 

Additionally, the recent risk of frost in some of Brazil’s key coffee-growing regions could drive up prices, as traders and investors fuel a bullish market.

How the C price is affecting consumers

As the C price settles just below US $3/lb, it marks a significant increase on prices seen in July 2024, which reached a 52-week low of US $2.21/lb.

While many assert that this signifies a long overdue change, as coffee has historically been an undervalued commodity, price volatility affects all levels of the supply chain in various ways. For roasters and coffee brands, it means raising retail prices, and their customers feel the pinch.

The UN FAO report found that up to 80% of these price rises will be passed on to EU consumers within the next 11 months and to US consumers in just eight months. The residual effects of these price rises are expected to last for four years.

Brands like JM Smucker, which owns Folgers, Dunkin’ at Home and Café Bustelo, are warning of further retail coffee price increases in August, following earlier hikes in May, June, and October last year.

Some supermarkets and grocery retailers have pushed back, signalling that prices are reaching the limits of what consumers will tolerate. JDE Peet’s also faced backlash from European retailers for its price hikes, with some chains even refusing to stock its products during negotiations.

As major brands pass on costs to maintain their margins, we can expect to see a widespread shift in consumer behaviour.

Following trends in other markets that have experienced similar price shocks, consumers initially absorb increases. However, as prices remain high or continue to rise, they inevitably adjust their behaviour to cope with the elevated costs. This could include buying less of the brands they typically purchase, switching to cheaper alternatives or private label products, or stopping the purchase of these goods altogether.

Eggs in the US market are a prime example. Average prices for a carton of eggs have soared from US $1.49 in 2018 to US $5.18 in 2025. In response, over a third of US consumers said they have stopped buying eggs, and won’t begin to purchase them again until the price comes down to US $5 or less.

Specialty coffee also feels the effects

As the C market remains high, prices for commodity coffee have approached those of specialty coffee – potentially reshaping market dynamics.

Specialty coffee has consistently maintained a point of differentiation from commodity coffee. Quality, traceability, supply chain transparency, attention to detail, and craftsmanship have defined the specialty coffee industry since its inception, justifying the higher prices it commands.

Although specialty coffee operates outside the C market, with roasters and importers paying premiums for higher-quality lots, it is heavily influenced by broader market trends.

“When the C market rises, everything goes up, including the specialty market,” says Albert Scalla, the Senior Vice President of Trading at StoneX Group Inc. “The robusta market exploded last year because of a drop in production, which led to an increase in arabica prices, revealing how markets are interconnected.

“Coffee has been volatile in the past five years due to a number of variables, including Covid, climate change, high interest rates, freight challenges, consumption shifts, and inflation,” he adds. “Commodity prices are now where specialty prices once were two years ago.”

The implications of C price fluctuations can also vary between producing countries.

“The impact from a commodity price hike is always noticeable in specialty coffee,” says Friso Miguel Spoor, the founder of Koffie Lente. “Ethiopia set a uniform cherry price at the beginning of the season, for instance, which allows exporters to offer a relatively lower price compared to the price hike in the commodities. 

“However, in Central America, there are differences between the pricing approaches by exporters and coops and producers, depending on how steady their domestic markets are,” he adds. 

Could more people switch to specialty coffee as prices stay high?

The economic gap between commercial and specialty-grade coffees has narrowed, presenting an opportunity for specialty coffee roasters and brands to capture a larger market share. 

“When the market is high, all coffee starts to look expensive,” says Sam Klein, a green coffee buyer at Partners Coffee. “Why spend a lot of money on bad coffee when you could spend a little more on great coffee?

“If a coffee roasting company mostly buys commercial grades, they have fewer avenues to reduce costs than another company that mostly buys high-quality, differentiated coffees,” he adds. “And if your only value proposition is that your coffee is inexpensive, it could be difficult to compete when the market raises your costs.”

In late March 2025, Reuters reported that supermarket coffee prices could increase by 25% within weeks. Some supermarket chains, including Albert Heijn in the Netherlands, promised to absorb some of the additional costs, while others restocked coffee products at higher prices.

Shortly after two quick consecutive hikes, major Brazilian roaster 3 Coracoes raised its prices by over 14% in early March. According to ABIC, Brazilian supermarket coffee prices have already increased by 40% this year, with further increases anticipated.

With smaller, incremental hikes, such as US $0.25 or US $0.50 per cup, or by downsizing retail coffee bags to keep total purchase prices more manageable, specialty coffee roasters and shops could offer more value for money.

Offering accessible blends or cost-effective single origins could steer more commodity coffee drinkers towards specialty-grade products. With a smaller price margin than ever before, roasters can now effectively showcase a clear value proposition of quality and artisanal excellence.

But to maintain this point of differentiation and manage tight margins, many specialty coffee roasters are also increasing their prices, potentially discouraging consumers from making the switch.

Simultaneously, when the C price is high, there’s less incentive for producers to grow specialty coffee.

“When prices are high, it reduces the financial incentive for coffee producers to deliver high quality,” Sam tells me. “If you could do less work and still profit, why not do that? Cash flow also becomes a major challenge, particularly for exporters who need to pay producers but don’t have committed buyers for the coffee yet.”

Which direction will consumers go in?

Even as the C price dips, retailers are likely to keep passing costs on, and consumer behaviour will pivot.

“I don’t think higher commodity prices will necessarily drive more consumers toward specialty coffee, but I don’t think higher prices will destroy existing demand either,” Sam says. “Some consumers will react to higher prices and either switch to less expensive products or reduce consumption; others might look at how expensive more commercial coffee brands have gotten and decide the extra cost for specialty coffee is negligible.”

Examining other industries that have faced similar economic conditions, consumers are likely to seek out more affordable alternatives. 

A UC Berkeley study found that soda taxes drove down consumption in five major US cities. The research found that the retail prices of sugar-sweetened beverages increased by 33% over the two years following the implementation of the tax in each of the studied cities. During the same timeframe, there was a corresponding 33% decrease in purchases of these drinks, as consumers likely sought out cheaper alternatives.

In the coffee industry, more cost-effective private label brands may emerge as the top performers. A recent US study reveals that over the past four years, private brand sales have increased by nearly a quarter each year. 

Further price hikes could accelerate this trend. Coffee consumers could downgrade from roast and ground to instant, buy more blends and supermarket own-brand products, or simply drink less coffee.

Despite high coffee prices, consumption remains steady. Specialty coffee roasters could offer cost-effective, high-quality blends as a way for commodity drinkers to transition to specialty coffee without facing a significant economic hit. 

But consumers are likely to be hesitant to pay more for coffee, so specialty coffee brands will need to find a point of differentiation to communicate their value.

“It’s an interesting moment for specialty coffee. The specialty sector has often relied on low prices to make its value proposition: delivering better coffee to consumers in exchange for fairer prices to producers,” Sam concludes. “That still applies, even in the current commodity market, but the question to me becomes: will specialty coffee companies continue to believe in this mission when the cheap coffee is no longer available?”

Enjoyed this? Then read our article on how roasters can make high-quality lots stand out.

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