Coffee prices have soared over the past few years, pushing roasters, independent cafés, and specialty coffee retailers into challenging territory. Rising costs for green coffee, energy, shipping, labour, and equipment are placing significant pressure on businesses.
For roasters and coffee shop owners alike, raising prices is no longer a choice but a necessity. Understanding what drives these price changes, how coffee consumers are responding, and what alternatives exist is essential for businesses aiming to remain sustainable in a volatile market.
I spoke to Darleen Scherer at Black Sheep and Kirk Pearson at Project Zero Coffee to discuss the pros and cons of raising retail coffee prices and how price hikes could impact consumer behaviour.
You may also like our article on why price volatility means roasters’ priorities are shifting.
Why are coffee prices staying so high?
Several factors are contributing to rising coffee prices. Green coffee costs, particularly for arabica, have recently skyrocketed due to adverse weather conditions, supply chain disruptions, and market speculation.
“We’ve seen green coffee prices surge to 47-year highs, with arabica hitting over US $4/lb – a 70% increase in just one year,” says Darleen Scherer, the founder of Black Sheep coffee consultancy, who has over 20 years’ experience working in the industry. “Add to this rising shipping costs, energy inflation, increasing wages, and tariffs, and the entire industry has been forced to rethink pricing strategies.”
Many roasters are reassessing their entire operations to ensure financial sustainability while maintaining quality standards.
For small and medium-sized businesses, especially, absorbing these rising costs indefinitely is simply not viable. Commercial-grade coffee businesses have also been hit particularly hard by these increases, narrowing the price gap between commodity-grade and specialty coffee.
As a result, it has arguably never been a better time to encourage more consumers to switch to specialty offerings. However, convincing customers to pay consistently higher prices has its challenges.
The risks and rewards of raising coffee shop prices
For many coffee shops and roasters, raising prices is a matter of survival – as overhead costs increase, so too must their prices in order to stay afloat. However, sharp price increases often don’t bode well with consumers and can drive them into the arms of competitors.
Rather than implementing steep price hikes all at once, many are making regular, smaller adjustments. This softens the blow for coffee consumers and opens conversations about sourcing and value.
“I’ve seen successful roasters adopt more dynamic pricing models that respond to market volatility rather than absorbing costs indefinitely,” Darleen says. “This prevents the shock of sudden large price increases for customers while also helping offset the upcoming tariff impacts that would otherwise require dramatic price adjustments.”
Aligning pricing with operating costs is crucial for coffee businesses hoping to maintain healthy margins and invest in quality. While higher prices can risk alienating some customers, they also reflect the reality of doing business in an increasingly costly environment. Roasters and coffee shops that communicate value effectively and maintain high standards are more likely to retain loyal coffee consumers, even in the face of price increases.
“We already sell some of the most expensive coffee in our area and have a customer base that grows every week, thankfully,” says Kirk Pearson, the co-founder of Project Zero Coffee in Melbourne, Australia. “Value doesn’t come down to coffee being cheap, but if the coffee is repeatedly excellent, then the customer knows they can get the value they’re looking for.
“Let’s say there are two cafés. One sells coffee for AU $4.50, and the other for AU $6,” he adds. “If the cheaper café delivers great quality only three out of ten times, while the more expensive one does so nine out of ten times, which offers better value?”
However, there are downsides to raising prices. One major challenge is that prices, once raised, can rarely be lowered again, even if market conditions improve. This can make it difficult for businesses to stay competitive should consumer expectations shift.
Additionally, raising prices can drive customers towards competitors that offer lower prices (also known as penetration pricing) in a bid to position themselves as the more cost-effective option.
How are coffee consumers responding?
Rising coffee shop prices inevitably prompt changes in consumer behaviour. Some coffee consumers are visiting cafés less frequently, treating specialty coffee as an occasional indulgence rather than a daily habit.
According to the National Coffee Association’s most recent National Coffee Data Trends 2025 report, at home remains by far the most popular place to prepare coffee; 71% of past-day coffee drinkers had coffee prepared at home only in 2025, compared to 63% in 2020. In contrast, 13% had coffee prepared both in and out of the home, compared to 19% in 2020.
“The consumer response has been mixed but generally more understanding than expected,” Darleen notes. “Most coffee drinkers recognise that inflation is affecting everything, not just their morning cup of coffee. When roasters and coffee shops communicate price increases transparently, acceptance tends to be higher.”
Kirk echoes this sentiment. He observes that although they are mindful of their spending, most consumers are aware of the global economy at large and are willing to spend money on things they value highly, including coffee.
“It’s hard not to notice things that are causing price rises,” he says. “No one likes paying more for things, especially for coffee; however, people understand that inflationary costs have affected everyone. The general response has been quite understanding, and the people who would be upset by price rises tend not to come to our café anyway.”
But this understanding doesn’t mean consumers are limitless in their spending power. There is still a threshold of what they consider reasonable, shaped by broader economic conditions, personal budgets, and perceived value.
Some consumers are opting to brew coffee at home more frequently, while others are switching to blends and more affordable single origin coffees.
Can coffee roasters delay price hikes?
It was only a few months ago that Starbucks CEO, Brian Niccol, announced a price freeze for the fiscal year to aid consumers with rising costs. With unprecedented price surges and rapidly enforced new tariffs announced since the start of 2025, it is a commitment they will likely need to back out of.
In an attempt to hold off on raising prices, some roasters and coffee shops have been seeking savings elsewhere, such as investing in more energy-efficient equipment and low minimum order quantity (MOQ) packaging. Meanwhile, many have been forced to suddenly absorb additional costs in an attempt to maintain customer loyalty and delay inevitable price increases.
Darleen believes that while such cost-saving measures can be effective in the short term, inevitably, a conversation needs to be had with consumers about how and why prices will increase.
“The most successful approach I’ve seen is when roasters are transparent about these adjustments, explaining that they’re trying to balance affordability with quality,” she explains. “Many are also managing their inventory more tightly to help manage cash flow.”
While temporary measures can provide breathing room, they’re not a long-term solution. For many businesses, passing some of the increased costs to coffee consumers remains one of the few sustainable strategies, especially as climate change and geopolitical instability continue to drive uncertainty in coffee supply chains.
“We have continued to invest in our coffee quality and in improving our customer experience,” Kirk explains. “Our approach has been to double down on the things that make us who we are, not try to cut costs. So far, it has worked.”
Operational improvements, such as upgrading equipment and implementing automation, can also help offset rising costs.
“The investment in the machinery when we opened is paying off now, because we run with less staff, and deliver coffee more consistently and with ease,” he says. “Automation gives us a cost advantage relative to other coffee shops because we can make it that much more efficiently.”
Meanwhile, other businesses have sought external funding or government support to weather these challenges, tapping into local enterprise initiatives or grants aimed at helping small businesses improve energy efficiency or manage overheads.
Will transparency help justify higher coffee prices?
Some roasters have embraced transparency to explain higher prices to coffee consumers. By breaking down the cost of each stage in the supply chain, from farming to roasting to brewing, they aim to demonstrate just how slim margins really are — and how much of the final price supports producers and operational sustainability.
“The most successful roasters openly share their sourcing practices, pricing structures, and the challenges they face,” Darleen says. “This radical transparency builds trust and helps customers see the relatively small margins that most coffee businesses operate on.”
Kirk, meanwhile, offers a more pragmatic perspective, claiming that customers care more about the quality of the product served to them rather than the justifications around price increases.
“My thoughts on this are evolving as the economic times become more uncertain and coffee supplies decline,” he says. “The modern coffee consumer is quite attuned to what good coffee is and why the good stuff costs more. If you’re delivering the coffee to a high standard, people will pay for it.”
He adds that the focus should remain firmly on value and has been vocal in his view that coffee prices ought to be based on real factors, not “arbitrary figures”. In his own venue, he explains that the strategy is to buy high-quality coffee and not to deviate from that, regardless of the final price that consumers pay.
Coffee prices are unlikely to drop significantly any time soon. For roasters and coffee shop owners, the challenge lies in balancing rising operational costs with delivering consistent value to consumers. Ultimately, success lies in thoughtful pricing strategies, effective communication, and a commitment to quality.
“The key factor isn’t necessarily the absolute price but the perceived value,” Darleen concludes. “Customers ask themselves: ‘Is this experience, this flavour, this moment, worth the premium I’m paying?’
“When the answer is yes, they’ll continue to pay higher prices.”
Coffee roasters who can clearly communicate their value while maintaining high standards will be best positioned to navigate these turbulent times. Even as coffee shop prices rise, many consumers remain willing to pay for quality, as long as every cup delivers on its promise.
Enjoyed this? Then read our article on how roasters can compete on more than price.
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