We are officially in unprecedented times in the coffee market. The market has taken a winding road to get to where we are today. If you think of the C market like a campfire, over the past 3 years we’ve had lots of fuel that’s been thrown on the fire and not a lot of water. Shortages in Robusta, supply chain disruptions due to Covid, the EUDR, and a precipitous drop in certified stocks have all acted as fuel for the fire. But the giant dose of gasoline that really put the market into overdrive was the Brazil production concerns for the 2025-26 harvest that emerged in November.
A high market is a double-edged sword, on one hand, coffee farmers are getting more money for their coffee but on the other hand, exporters, coops, importers, and coffee roasters are dealing with new cash requirements that are putting strains on businesses across the spectrum of our industry. We are here to support you. Usually, that looks like us talking through some delicious coffee options and impactful projects to support, but today we’d like to cover a few strategies that can help roasters cope with all the chaos.
Understand Your Costs Knowing your costs is the foundation of effective risk management. This includes not only the cost of green coffee beans but also operational expenses, labor, and overheads. A clear understanding of your costs allows you to make informed decisions and set realistic prices. Consider reviewing things like shipping costs, coffee selections, and labor strategies to make sure you are operating as efficiently as possible.
Look at Raising Your Prices Consider adjusting your prices to reflect increased costs. With coffee prices in the news, customers and consumers are expecting coffee prices to go up. Transparent communication with your customers about the reasons for price changes can help maintain trust and loyalty. Quality-focused roasters have an opportunity here to lean into why paying more matters for coffee farmers and how it translates to a better-tasting cup of coffee.
Establish a Risk Management Plan A well-defined risk management plan helps take the emotion out of decision-making. Set parameters in advance, such as buying a certain number of months’ coverage if the market dips below a specific price, or securing coverage if the market rises above a certain threshold. This structured approach ensures consistent and rational decisions, even in volatile times. We can help you talk through some strategies we have seen implemented effectively over the years. Your acceptable band of pricing will be driven by your ability to accurately price your coffee discussed above.
Buy Coffee “Hand to Mouth” Adopting a “hand to mouth” buying strategy means purchasing coffee in smaller quantities more frequently. This approach can help you avoid overcommitting at high prices and allows for greater flexibility in response to market changes. Consider booking coffee for 2-6 months depending on your personal tolerance for coffee price volatility.
Buy the Dips in the C Market Take advantage of market dips to purchase coffee at (relatively) lower prices. This requires close monitoring of the market and a willingness to act quickly.
Don’t Chase the Last Penny per Pound Avoid the temptation to try to squeeze out the last penny per pound. If you are near the level you are looking to book at, do it! Don’t sweat it if the market moves after you make your decision.
Our sales team is happy to chat through any questions or concerns that you might have, so please reach out!