'As exclusive as champagne': the time of cheap coffee is over

In the small canal house of Amsterdam coffee shop Back To Black, the chatter of coffee-drinking twenty- and thirty-somethings bounces off the walls. The crackling hiss of a steam pipe can just be heard above the cacophony. The shelves on the wall are filled with bags of beans from all over the world: Panama, Colombia, Peru, Brazil, Ethiopia.

€3.60 costs a cappuccino. Five words on the inside of the cup hint at a regular clientele of people who are happy to pay that amount: Thank you for being addicted. The text is spot on: a cappuccino is not quickly too expensive for caffeine-addicted consumers. But for how much longer?

Globally, we drink 3 billion cups of coffee a day, and that number is only likely to increase in the coming years. By 2050, that number could be 6 billion cups, according to the International Coffee Organization, as the beverage becomes increasingly popular in countries such as China, India and Vietnam.

At the same time, coffee prices have broken record after record over the past year. This has ushered in a new era of coffee. Expensive coffee beans create winners and losers, force parties throughout the coffee chain to negotiate harder, and lead to inventive solutions.

It all started with dancing goats. Or so the legend goes. In the ninth century, the Ethiopian goatherd Kaldi saw his goats dancing and jumping under the trees where the same red berries grew every year. They turned out to be coffee berries, which in hot water were also quite palatable for humans: the first cup of coffee.

There are two main players on the world market: robusta (which accounts for about 40% of global coffee production) and arabica (roughly 60%). The former is mainly found in kitchen cupboards worldwide, ground into powder for instant coffee, due to its low price and high caffeine content .

Coffee connoisseurs traditionally looked down on this less subtle variety, preferring robusta's more refined, sweeter brother: arabica. These coffee trees grow at higher altitudes, yield less and are more sensitive. But they are tastier, according to many. For example, coffee giant Starbucks only serves arabica. The company compares the taste of robusta to that of 'burnt rubber'.

Yet robusta has become increasingly popular in recent decades, including in emerging markets in Asia. An added advantage: the bean is somewhat more resistant to extreme weather caused by climate change, the main driver of higher coffee prices. Frost and drought caused crops to fail in Brazil last year, while heavy rainfall and flooding did the same in Vietnam. 'Extreme situations are very damaging to the coffee plant,' says Thijs Geijer, sector economist at ING.

Climate change will cause a shift in the major coffee-growing countries. Brazil, Vietnam, Colombia and Indonesia could see the share of their land suitable for coffee cultivation shrink. At the same time, countries further from the equator, such as the United States and China, could become coffee producers, according to a study by the University of Zurich.

For now, the finicky coffee bean only grows in a few regions of the world. 'Coffee plants thrive in warm areas with high humidity and constant temperatures. Altitude often provides a richer flavor,' says Geijer. Higher temperatures could, in the worst case, make an estimated half of agricultural land unsuitable for coffee production. European anti-deforestation legislation could also increase the scarcity of coffee land.

It is a bitter interplay between the short and the long term. Warmth is already causing farmers to seek higher ground, says Geijer. 'Sometimes farmers plant the coffee of the future on higher, currently forested, places, because it is cooler there, but that can actually accelerate climate change.'

The question is which farms will survive the new normal of expensive coffee due to increasingly uncertain harvests. The differences between farmers are large.

'The poverty is so severe that farmers sometimes don't even have boots and work their feet to pieces, on increasingly steep plantations higher up the mountain,' says Ferry Poppegaai, founder of Wonder Beans. The company makes monoculture plantations of thousands of farmers in Peru and Uganda more sustainable, with more trees and healthier soil. In this way, Poppegaai wants to help farmers survive. The land of poorly paid farmers is deteriorating rapidly, for example because they have to cut down more and more trees. 'That can ultimately cause them to stop and the coffee volumes to decline,' he says.

The current world market prices are not enough to counteract that. 'Higher prices do not simply end up with the farmer.' Who does benefit from it is hard to trace in the long, opaque coffee chain, according to Poppegaai.

'Normally, the remedy for high prices is high prices ', says Rabobank economist Sebastiaan Schreijen. 'Because higher prices stimulate supply. That is not the case now, because the higher prices do not automatically end up with the farmers.'

If the harvest is successful, the beans still have to cross oceans. High transport costs there further drive up prices. In January, for example, Houthi rebel attacks on container ships led to a 30% price increase for robusta coffee within a month.

Without the vital Red Sea passage, many carriers are forced to sail. A route around Africa, rather than the short route through Egypt’s Suez Canal, means higher fuel costs, longer travel times and rising transport fees.

Meanwhile, the unrest has presented speculators with an opportunity to make money. Coffee futures prices have soared since early 2024. Not long after, President Donald Trump’s announcement of US tariffs has caused prices to fall again.

Speculators play on these kinds of fluctuations without ever seeing a coffee bean up close. 'And that causes scarcity and unrest in the market', says Geijer. The CEO of the Italian Lavazza, one of the largest coffee suppliers in the world, warned in the British business newspaper Financial Times that speculation - in addition to extreme weather - is currently one of the main causes of the high coffee price.

Smaller companies do not trade on the global coffee market. They buy directly from coffee farmers, says Lennart Clerkx. With his company This Side Up, he imports specialty coffee for coffee roasters. 'We agree on a price that depends on the harvest. If there is too much rain or too few pickers, the price goes up.'

They make these agreements shortly before Clerkx ships the coffee. 'I just came from Nicaragua, where a farmer had twenty days of rain. Normally it hardly ever rains there during the harvest. So we raised the price by thirty cents.'

He sees something unique happening. 'The world market price is rising above our prices for the first time.' As a result, coffee from a gigantic Brazilian plantation can suddenly cost as much as coffee from a small farm in Kenya. 'It disrupts the market,' he says. 'Because a farmer can now get a higher price from anyone for any quality of coffee bean.'

Clerkx operates completely differently than coffee suppliers such as Douwe Egberts parent company JDE Peet's and Starbucks. These companies conclude large contracts via the global market. That can provide certainty.

But a new era has also dawned for major players, says Kenneth Timmermans, director of the Netherlands at JDE Peet's. When coffee prices remained structurally high in 2024, that realization dawned on the office. 'Panic is a big word, but we did realize: this is really uncharted territory.'

Climate change will affect the multinational, says Timmermans. That is why the company is researching coffee plants that are more resistant to major weather changes.

The different purchasing methods explain why suppliers and supermarkets started arguing about the higher price of coffee months ago. Packets of Douwe Egberts coffee were missing from many European supermarkets, from Jumbo to Intermarché. Coffee shops that buy from suppliers such as Clerkx had little to do with it.

That will change this summer. 'I expect my beans to become 30% more expensive soon,' says Richard Jones, owner of Jones Brothers Coffee. He sells specialty coffee to supermarkets and the hospitality industry and has a small coffee shop in Amsterdam's Pijp. Because all his other costs are also rising, the prices at his coffee bar are going up. 'A cappuccino can then cost around €6. The era of cheap coffee is over. It's over.'

A cappuccino includes the rental costs of the coffee shop, the staff costs of the barista and the transport costs through the Netherlands and around the world. These costs also add up. The coffee bean determines only a small part of the price, just like with a package of quick filter grind in the supermarket.

In the supermarket, a kilo of coffee could shoot past €20 this year, according to Rabobank. This spring, consumers are still paying an average of €17 per kilo.

That's not a problem, says Clerkx. 'Coffee has been structurally too cheap since the eighties', he says. It should be a luxury product, because the coffee plant can only grow in a few places in the world. Moreover, coffee is a labour-intensive product, he says. 'It's such a pain in the ass to pick all those cherries from the coffee plant with your hands.'

More expensive coffee can help farmers make their business climate-proof, Geijer adds. 'If prices are high enough, farmers can fertilize or invest in varieties that can better withstand extremes.'

Inge Bulthuis, owner of coffee shop and roastery Back To Black, expects the best quality coffee to become 'terribly expensive'. 'But I wonder if people are prepared to pay “wine prices” for coffee.'

Jones also doubts whether people will simply accept it if coffee soon becomes as exclusive a product as champagne. 'I talk to my customers every day. No matter how much they understand all the world's problems, they don't want to pay much more.' He is afraid of losing customers to larger coffee chains that don't have to raise their prices as quickly. They can bear the higher costs themselves for longer.

The widespread need for caffeine does offer coffee shops and traders some certainty in volatile times. 'Drinking coffee is much more than a habit. It's almost a ritual,' says Geijer. 'A lot of people say they can't do without coffee in the morning. You don't hear them say that about cheese, apples or bread.'

This is also evident in the coffee shop Back To Black, where customers wait on the sidewalk for their caffeine fix. Bulthuis recently started serving a new coffee. New to her at least: the much-maligned robusta coffee. 'Climate change is making it increasingly difficult to grow very special arabicas. I think that price is going to increase dramatically.'

That's why the entrepreneur is experimenting with existing coffee beans. 'Robusta can also be fruity if you grow and roast it in a very precise way', says Bulthuis. In this way, the entrepreneur is also trying to get the coffee snob on board. He has to. 'Because this is the future of coffee: a market that is under pressure and a world that wants more coffee every year.'