Coffee has become an essential part of daily life for many in the UK. However, in recent years, consumers have noticed their morning brew is starting to weigh on their pockets. It begs the question, “why is coffee in the UK so expensive”?
In 2018, the average price of one unit of coffee in the UK coffee market was £17.85 for roast coffee and £16.26 for instant. In 2024, this increased by 38% to £24.67 and by 35% to £21.95 respectively.
These surging prices are reflective of the huge costs currently facing UK coffee roasters and buyers. As costs for these businesses increase, so does the high-street cup of coffee for consumers.
The rising cost of coffee is not just driven by strong demand but by complex global factors, including disruptions in coffee production, supply chains, and exports.
With expertise in helping importers and exporters set their budgets with confidence and maximise their profits, we’re sharing the global challenges facing UK businesses and evaluating whether we can expect prices to continue rising.
Table of contents
- How much does coffee currently cost?
- Why prices are rising for UK coffee roasters and buyers?
- Will coffee prices continue to rise in the UK?
- Conclusion: what can businesses do?
- 10 FAQs about why coffee is so expensive in the UK
How much does coffee currently cost?
In the UK, the price of coffee has steadily risen over the past few years. Whether it’s the cost of a takeaway cup from your favourite café or the price of coffee beans at the supermarket, consumers are feeling the pinch.
Recent data shows that the cost of a cup of coffee in the UK has increased significantly in the last five years. For example, a flat white coffee from Pret a Manger would’ve cost you £2.45 in 2019. In 2024, the same coffee will now set you back £3.60, rising by 47%.
Globally, coffee prices reached 13-year highs in August 2024. The price of robusta beans (one of the world’s most popular alongside arabica), hit 47-year highs – also in August 2024.
But what’s driving these price hikes? The answer may well lie in the global coffee supply chain.
Rising production costs, export challenges, and geopolitical events are having a direct impact on the availability of coffee for UK businesses.
Why prices are rising for UK coffee roasters and buyers
In recent years, UK coffee roasters and buyers have seen significant price increases due to a range of global factors.
From coffee production challenges and rising input costs to geopolitical conflicts and currency fluctuations, the coffee supply chain is facing intense pressure. These challenges are forcing UK businesses to absorb higher costs, which are inevitably passed on to consumers.
Coffee production challenges
Global coffee production has faced significant hurdles in recent years. Some of the world’s largest coffee-producing nations such as Brazil, Vietnam, Colombia and Ethiopia have been particularly affected.
Issues like unpredictable weather, rising input costs, and labour shortages have all contributed to a slowdown in production.
Climate change
Coffee is highly sensitive to weather conditions, and climate change has caused extreme weather events like droughts, floods, and unusual temperature patterns.
In 2024, Brazil, the world’s largest coffee producer, experienced its worst drought since records began almost 70 years ago. The drought damaged crops across the nation with the impact already carrying over into the 2025/26 season.
It’s been cited as a significant contributor, along with drought in Vietnam, to the 13-year high coffee prices reached in August 2024.
But it’s not just heat caused by climate change that’s affected the South American giant’s coffee supply. In 2021, Brazil experienced a severe frost that wiped out 200,000 hectares of cultivatable coffee fields.
The shock event had a significant impact on global coffee supply, driving prices of arabica beans to seven-year highs.
Frosts such as this, and droughts attributed to climate change, may continue piling pressure on Brazil’s coffee exports.
With fewer coffee beans available for export, supply is limited, and prices rise for UK businesses and consumers.
Rising costs of inputs
Coffee farmers face crippling costs for fertilisers, equipment, and labour. In the words of Jonas Ferraresso, a coffee agronomist and advisor based in Brazil, ‘the only thing worse than expensive fertiliser, is no fertiliser at all’.
That sentiment becomes especially challenging when fertiliser costs for Brazilians increased by 80% in 2021, followed by a further 30% in 2022.
The staggering rise in fertiliser costs were driven by a double-barrelled blow from the Covid-19 pandemic and war in Ukraine. These two black swan events also pushed global inflation to multi-decade highs in 2022.
As a result, production expenses increased making it more difficult to maintain large-scale coffee farming, lowering output.
These factors mean that businesses importing coffee to the UK face higher costs with the knock-on effects likely to continue.
Exporters find more profit elsewhere
Due to the production pressures we discussed above, some leading coffee exporters are investigating more fruitful opportunities elsewhere.
Vietnam, the world’s second-largest coffee exporter, is switching out coffee for durian due to its popularity in China.
The fruit, known for its pungent smell, is five times more valuable than coffee for Vietnamese exporters.
As a result, Vietnam almost doubled its durian market share in China between 2023 and 2024.
This has had a profound effect on global coffee exports. According to the International Coffee Organisation, robusta coffee exports are down 50% in June 2024 compared to June 2023.
With one major exporter opting out of the coffee trade, more pressure has piled on global coffee supply chains, contributing to higher prices for UK coffee businesses.
Geopolitical conflicts and supply chain disruptions
The war in Russia and Ukraine played a significant role in driving global inflation and weighing on supply chains.
For coffee exporters, this meant more expensive fertiliser, equipment and other crucial elements of production.
More recently, attacks on cargo ships in the Red Sea by Houthi militants have reduced shipping capacity and increased coffee costs.
The attacks, which took place in January 2024, meant shipping companies were rerouting around the southern tip of Africa, causing three-week delays.
In response, container freight rates jumped by 150% on the Asia-Europe route.
The impact of these delays and higher costs further squeezed UK coffee buyers and roasters. This forced businesses to absorb higher shipping costs or pass them on to consumers.
Read: Importing from China to the UK: the essential guide for wholesalers in 2024
Currency exchange rates and restricted currencies
For UK coffee buyers and roasters, fluctuating exchange rates and the challenges of restricted currencies can significantly impact costs.
With the majority of global coffee trade conducted in US dollars (USD), the exchange rate between pound sterling (GBP) and USD plays a crucial role in determining how much UK businesses pay for coffee.
Additionally, some coffee-exporting countries use restricted currencies, making it difficult for UK importers to avoid costly conversions.
Exchange rate fluctuations
Currency exchange rates are constantly changing. This has potential to be damaging for coffee buyers and roasters due to the various currencies involved in the process of importing coffee beans.
A considerable amount of coffee trade involves USD. So, for UK businesses, the value of GBP against USD will be the currency pair in focus.
Between 2021 and 2024, GBP/USD traded as high as 1.41 and as low as 1.07. This means, at its peak, you could’ve purchased $1,410,000 worth of coffee with £1,000,000. At its lowest you’d have only been able to purchase $1,070,000 with the same £1,000,000.
Currency fluctuations can cause budget headaches for UK coffee importers and surprise swings can be damaging to their bottom line.
If the value of the pound weakens against the dollar, UK coffee buyers will have to pay more for their coffee. Importers then must decide whether to take the hit themselves or pass the costs on to consumers, raising the price of their cup of coffee.
Restricted currencies
The main reason why USD is the common currency in the coffee industry is because it’s widely used as a stable, global currency.
Also, currencies such as Brazilian real (BRL) and Ethiopian burr (ETB) are known as restricted currencies. This means it can be difficult for UK businesses to make payments directly to countries like Brazil and Ethiopia.
Paying Brazilian coffee exporters in BRL, for example, can avoid the need for UK businesses to convert currencies from GBP to BRL to USD. This may reduce costs associated with exchange rate fluctuations and currency conversion fees.
In certain situations, paying in BRL might offer a more favourable exchange rate depending on market conditions, allowing the UK coffee buyers to potentially save money on the overall transaction.
Also, some Brazilian exporters might prefer to receive payments in BRL to avoid conversion losses and the complexities of managing multiple currencies. They’ll have to pay their workforce in BRL, so converting from USD may be expensive for them.
While there are some advantages to paying coffee exporters in their local currency, finding a way to pay in currencies such as BRL and ETB can be tricky. Working with a currency specialist like Privalgo can widen the range of currencies available to you.
If your business purchases coffee from exporters who’d prefer to be paid in their local currency, fill in the form below to see how we can help.
Will coffee prices continue to rise in the UK?
Given the current global challenges facing coffee production and exports, it’s highly likely that coffee prices will continue to rise for both businesses and consumers in the UK.
Giuseppe Lavazza, chairman of Italian coffee company Lavazza, told the Guardian in July 2024 that ‘we have never seen such a spike in price as the trend right now’.
He expects the price of coffee to remain at the current 15-year highs until at least the middle of 2025 due to supply chain pressures.
The reasons for these supply chain strains, according to Lavazza, were challenging harvest conditions in Brazil, Vietnam and Colombia, as well as shipping disruption in the Middle East.
As a result, UK coffee importers have had to, and will continue to, pay more to secure their supply. This increased cost will inevitably trickle down to the customer.
For UK consumers, the cost of beans could increase by up to 25% over the coming year. This means we could be closer to reaching the £5 coffee – a figurative benchmark gawped at by regular takeaway coffee drinkers.
As businesses grapple with soaring costs, they’re left with little choice but to pass these on to their customers.
It seems unlikely we’ll see coffee prices fall. However, global inflation is on its way down and supply disruptions caused by the Red Sea attacks won’t last forever.
Therefore, coffee prices dropping might be wishful thinking, but UK businesses and consumers can be hopeful that they’ll increase more slowly in 2025 and onwards.
Conclusion: what can businesses do?
To survive and thrive, UK businesses will have to prepare for the ever-changing global challenges of the coffee industry.
Preparing for black swan events like Covid-19, war in Ukraine, and financial crises can be difficult. That being said, there are ways UK coffee importers can protect themselves from potentially catastrophic setbacks. Here are a few strategies they could consider:
Diversify suppliers
Whether it’s due to bad weather, labour shortages or shifts in priorities to other exports, supply shortages can appear from anywhere and drive costs.
By sourcing coffee from a broader range of countries and regions, businesses may be able to reduce their reliance on a single exporter.
For example, UK importers of arabica beans can look to trade with countries such as Peru, Kenya and Ethiopia. For robusta beans, importers can add Indonesia, Vietnam and Uganda to their supply chain.
Streamline supply chains
An efficient supply chain is essential for UK coffee businesses to keep costs low. To ensure their supply chains run as smoothly as possible, importers can look to negotiate better shipping terms or work with logistics partners to improve efficiency.
Paying employees in other countries? Read: How global payroll solutions are driving business growth.
Control currency risk
In an industry full of challenges, UK coffee roasters and buyers may sometimes feel like their costs are out of their control. Bringing certainty to costs in such an uncertain environment may seem unachievable. But with an advanced foreign exchange (FX) strategy, businesses can set currency budgets with confidence.
As we discussed in this article, currency values never stand still. Significant swings in GBP/USD can reduce profits and impact forecasts.
To mitigate this, UK coffee roasters and buyers can work with a currency specialist like Privalgo.
We help UK coffee importers build FX hedging strategies using products like spots, forward contracts and market orders.
Spots take advantage of the current currency market exchange rate. Your business can exchange currencies today at a competitive exchange price.
Forward contracts lock in today’s exchange rate for transaction at a later date. This means, if your budget suits the rate now but your cashflow doesn’t, you can secure today’s rate and pay for it later.
This way, you know exactly how much you’ll be paying for your currency, bringing certainty to your costs.
Market orders empower your business to capitalise on favourable rates of exchange. If you have an ideal rate in mind that fits your budget but the market still has somewhere to go, you can set a target rate with us.
If your target rate is met, we’ll trigger an automatic transaction at that price. Your team no longer needs to stare at the currency markets all day, saving them valuable time.
Get in touch with us today to find out how our FX hedging strategies can maximise your profits and help you forecast without fear.
10 FAQs about why coffee is so expensive in the UK
Below is a list of common frequently asked questions we see surrounding why coffee is so expensive and whether its price will continue to rise.
Why is coffee getting more expensive in the UK?
Coffee prices in the UK are rising due to a combination of factors. These include global supply chain disruptions, rising production costs, and climate-related issues in key coffee-producing countries like Brazil and Vietnam.
Exporters are facing increased costs for fertilisers, labour, and shipping. These costs are passed on to UK roasters and buyers and eventually consumers.
How much has the price of coffee increased in recent years?
Between 2018 and 2024, the price of roast coffee in the UK increased by 38% (from £17.85 to £24.67 per unit) and instant coffee by 35% (from £16.26 to £21.95 per unit).
Additionally, the cost of a flat white from Pret a Manger rose from £2.45 in 2019 to £3.60 in 2024, marking a 44% increase.
What impact has climate change had on coffee production?
Climate change has caused severe weather events like droughts and frosts in major coffee-producing regions such as Brazil. In 2021, Brazil experienced a frost that destroyed 200,000 hectares of coffee fields, leading to a significant reduction in global supply and pushing up coffee prices.
Why are coffee farmers facing higher production costs?
Farmers are dealing with rising costs for fertilisers, equipment, and labour. Fertiliser costs alone increased by 80% in 2021 and a further 30% in 2022. Mainly, these were driven by supply chain issues caused by the Covid-19 pandemic and the Russia-Ukraine war.
How is Vietnam’s shift to exporting durian affecting global coffee prices?
Vietnam, the world’s second-largest coffee exporter, has shifted some of its focus to exporting durian due to higher profits in the Chinese market. This shift has caused a 50% drop in robusta coffee exports.
As a result, global supply has reduced and prices have increased for UK coffee roasters and buyers.
What impact have geopolitical events had on coffee prices?
Geopolitical conflicts, such as the Russia-Ukraine war and recent attacks on cargo ships in the Red Sea, have disrupted coffee supply chains. These disruptions have increased shipping times, container freight rates, and the overall cost of importing coffee into the UK.
How do currency exchange rates affect the cost of importing coffee?
Many coffee transactions are conducted in USD, so fluctuations in the value of GBP against USD can significantly affect the cost of importing coffee to the UK.
For example, between 2021 and 2024, GBP/USD fluctuated between 1.41 and 1.07. This significant difference impacted how much coffee UK businesses could purchase for the same amount of GBP.
Why is coffee so expensive?
Coffee has become more expensive due to a combination of climate change, which has reduced yields in key producing regions, rising input costs like fertilisers and labour, and geopolitical issues affecting global supply chains.
The price increases reflect higher production and shipping costs, which are passed down to importers, roasters, and ultimately consumers.
Is the price of coffee going up in the UK?
It’s highly likely that coffee prices will continue to rise in the UK due to ongoing supply chain disruptions, rising production costs, and weather-related challenges.
Experts expect coffee prices to remain high until at least mid-2025, according to industry sources like Giuseppe Lavazza.
What can UK businesses do to protect themselves from rising coffee costs?
UK businesses can mitigate rising coffee costs by diversifying suppliers, streamlining supply chains, and hedging currency risk.
Working with a foreign exchange specialist like Privalgo can help businesses secure more favourable currency rates and manage exchange rate fluctuations, reducing your overall costs.
