Coffee Prices Surge Amid Supply Challenges and Industry Shifts on August 31, 2025

Global Coffee Prices Surge on Brazil Weather and U.S. Tariffs

Global coffee prices have surged sharply in August 2025, with arabica futures rising by 29% and robusta prices increasing by 1.5 times, making coffee the fastest rising commodity this month. This price rally is driven by adverse weather conditions in Brazil, including repeated cold fronts and light frosts in major coffee regions such as Sul de Minas and Cerrado, threatening both current and 2026 harvests. Additionally, the imposition of a 50% U.S. tariff on Brazilian coffee imports has disrupted global markets, reducing Brazilian export volumes but increasing export revenues due to higher prices. Market dynamics including sluggish export flows and traders closing short positions have further accelerated the price rise. Coffee stockpiles monitored by exchanges are dwindling, intensifying supply pressures (Qahwa World, 31 August 2025; Chemanalyst, 31 August 2025).

Vietnam Coffee Market Faces New VAT and Export Growth

Vietnam introduced a new 5% Value Added Tax (VAT) on coffee beans effective July 1, 2025, which has raised domestic coffee prices and sparked controversy among exporters who fear reduced international competitiveness. Despite this, Vietnam’s coffee export value has exceeded government projections, reaching $5.4 billion in the first half of 2025, buoyed by record global prices and growing demand in markets such as Spain and Algeria. Vietnam is increasing production, mainly of Robusta, supported by favorable weather, high domestic prices, and replanting programs. Domestic coffee consumption is also expected to grow by 22.5% to 4.9 million bags, driven by an expanding middle class and café culture (Chemanalyst, 31 August 2025).

Nescafé Exceeds Regenerative Agriculture Targets

Nescafé has surpassed its 2025 target for sourcing coffee from regenerative agriculture practices, achieving 32% compared to the initial 20% goal. This achievement is part of its “Nescafé Plan 2030,” which aims to improve soil health, biodiversity, and reduce greenhouse gas emissions by 20% to 40% per kilogram of unroasted coffee. The program also integrates social responsibility efforts, including human rights and child protection within its supply chains (ESG Dive, 26 August 2025).

Common Goal Coffee Publishes 2025 Sustainability Report

Common Goal Coffee released its 2025 Sustainability Report, detailing environmental and social commitments in coffee equipment and packaging. The company introduced reusable and recyclable packaging for samples and supports producers practicing agroforestry, water conservation, and reduced pesticide use. Collaborations with carbon-negative coffee producers in Brazil highlight innovations in sustainable coffee production that capture more carbon than emitted (Common Goal Coffee, 26 August 2025).

Market Outlook and Industry Growth

The global coffee market is valued at approximately $74 billion in 2025 and is projected to grow to $96.5 billion by 2029 at a CAGR of 6.9%. Growth drivers include changing consumer preferences for artisanal and craft coffee, premiumization, sustainable sourcing, e-commerce expansion, and health trends. Coffee consumption remains robust, with 66% of Americans drinking coffee daily as of early 2025, supporting continued market expansion (Research and Markets, 31 August 2025). Meanwhile, global coffee production is forecast to reach a record 178.7 million 60-kg bags in 2025/26, led by gains in Vietnam, Indonesia, and Ethiopia, although inventories remain tight at 22.8 million bags amid record consumption of 169.4 million bags (USDA, 26 August 2025).