This year has been one of the most momentous for the specialty coffee industry. Record coffee prices, rising inflation rates, a global trade war, and ongoing cash flow constraints have ushered in a new era marked by volatility and uncertainty.

The coffee industry is resilient and has weathered numerous storms throughout its history, but the challenges that coffee businesses are facing in 2025 are unlikely to subside anytime soon, especially as the effects of US tariffs are felt in all corners of the world.

While this can create a sense of trepidation and scepticism, business operators who prioritise effective cash flow management will be best prepared to navigate the months ahead.

I spoke with Zach Dowse, operations manager at Landgon Coffee Merchants, and Jake Leonti, director of coffee at Gregory’s Coffee, to find out more.

You may also like our article on how much coffee shops need to raise their prices.

How new challenges are reshaping the industry

As the C price continues to hover around US $4/lb for the first time in decades, roasters, in particular, are facing unprecedented challenges that are reshaping their green coffee buying strategies.

When coffee prices are low, specialty coffee roasters can source high-quality lots while still maintaining healthy profit margins, positioning them well for future business growth. But as arabica futures remain consistently high, many roasters are switching to offer more cost-effective blends or diversifying to include lower-cost origins like Brazil to manage tighter margins.

Inevitably, this leads to knock-on effects along the supply chain. Traders, also feeling the impact of price volatility, have to adjust their buying behaviour to cater to changing roaster demand.

“We’ll see some short-term changes in green coffee buying habits to accommodate the rapid surge in prices,” says Zach Dowse, the operations manager at Langdon Coffee Merchants, a specialty green coffee importer that operates in the UK, Australia, and New Zealand. “Importers will likely steer clear of heavy spot positions as stakeholders adjust.”

Spot buying happens in “real-time”, whereas forward buying is when sellers and buyers agree to future transactions at a fixed rate. With coffee prices remaining high and volatile, locking in set prices offers a level of certainty that roasters, traders, and producers are currently seeking.

Simultaneously, however, securing the capital to purchase large volumes of coffee upfront has become more challenging. Many roasters rely on short-term loans to cover the costs of large coffee purchases, but because the risks associated with lending have also increased, banks and financial institutions are tightening credit lines and enforcing stricter conditions.

“Cash flow is the most significant issue in the coffee industry worldwide today,” says Jake Leonti, the director of coffee at Gregory’s Coffee in New York City, US. “Exporters at origin don’t have access to enough cash to purchase cherry, and importers don’t have enough to purchase green in large volumes. 

“Roasters don’t have cash to purchase long-term green coffee supplies – the list goes on,” he adds. “This is why we’re seeing a lot of coffee companies seeking investors and selling parts or all of their companies to bring cash into the business.”

Industry dynamics are shifting

Price volatility in the coffee industry isn’t new, but the current period of sustained high prices is creating unforeseen challenges, compounded by rising inflation, climate-driven supply shortages, and increasing interest rates.

US President Donald Trump’s recent global trade tariffs have exacerbated these issues, introducing additional complexity and costs to an already strained supply chain. Trump announced universal import taxes in early April, which initially included levies between 10% and 104% on imports from the majority of the world’s top 20 coffee-producing countries. This caused coffee prices to fall sharply as speculators bet on price depreciation.

Since Trump reduced the levies to between 10% and 25%, the C price has steadily increased to near-record levels again. With coffee prices not expected to retreat until late 2025 – and the ripple effects likely to be felt for at least four years – the industry is grappling with a structural shift rather than a passing trend.

Many point out that this shift is a long overdue change in the industry, as coffee has historically been an undervalued product. But for producers, high prices aren’t necessarily a be-all-end-all solution. The costs of labour, fertilisers, and other inputs have risen alongside coffee prices, meaning their margins remain tight. Producers also face cash flow constraints to cover the rising costs of production, putting them in a similar position to roasters and traders.

In turn, all supply chain actors are exercising a new level of caution and operational awareness. Roasters are seeking to mitigate risks by diversifying their offerings, while producers are focusing on efficiency and exploring ways to add value to their coffee.

Collaboration, communication, and shared risk management have become increasingly essential to support these industry-wide shifts.

“Relationships are incredibly important in the current economic climate,” says Jake. “If roasters have maintained a solid relationship with their importer, then they should want to help their clients succeed as well. If you work with direct trade, you can often purchase at a fixed price rather than being held to the whims of the market.”

Managing costs is the most effective way forward

The entire coffee supply chain is currently navigating uncharted territory, not only with higher coffee prices but also political turbulence and a worsening climate crisis. For roasters, who historically have been in a more advantageous position than most supply chain actors, the situation is particularly challenging.

At the same time, the current volatile landscape creates opportunities to become more innovative and creative, building resilience that businesses can sustain in the long term. Ultimately, the main goal is to manage cash flow while preserving, or ideally improving, coffee quality.

“Don’t wait for a specific C price to make your purchases. Buy and fix when the market is trending down, but if you wait too long, the market will jump right back up again,” Jake says. “If you don’t have a substantial volume to leverage, you can reach out to other roasters to try and combine your volume with an importer to create more purchase power and favourable rates.

“Alternatively, rather than relying primarily on the consistency of your blends, change to a rotating menu of seasonal blends and single origins,” he adds. “Reduce waste as much as possible, too. If you have cafés, make sure your brewing equipment is well kept so you’re not wasting coffee to dial-in more frequently than needed due to dull burrs, for example. 

“Little things along every step of the way; we’re in the period of tightening up every aspect of a business.”

Roasters need to play to their strengths

There is, however, a fine line between balancing new, creative strategies and tried and tested systems. The ongoing market turbulence and uncertainty can cause some roasters to pivot away from “business as usual” in the hope that alternatives will result in more success.

“Too many roasters see mounting pressure within the industry, and all of a sudden, believe they need to change the foundation of what they do to compensate,” Zach says. “Step back and go to the basics of booking coffee as it’s harvested seasonally with importers or producers; this removes massive unknown risk as a business owner.

“Once you know the pricing of your core offerings, then you can start to plan and work around them,” he adds. “Order small and often, maintain reasonable credit terms with clients and work on how to best translate the narrative of the value in your product and service to your clients, maintaining your unique voice in the industry and refraining from compromising. 

“This shows respect for your clients and customers, and underscores why they are supportive of you as a brand, leading to a stronger and better long-term relationship.”

As the specialty coffee industry transitions into a new era, the ability to manage costs is no longer a competitive advantage; it’s a prerequisite for navigating the foreseeable future.

Passion and craftsmanship will always be central to the industry’s values, but effective cash flow management has never been more crucial.

“If you are confident in the value you provide for clients and consumers, then feel empowered to price your coffee in line with what makes sense for your business,” Zach concludes. “Focus on the details, big and small, fine-tune your customer service, and your clients will continue to support you.”

Enjoyed this? Then read our article on how smaller roasters can mitigate risk.

Photo credits: Langdon Coffee Merchants

Perfect Daily Grind

Want to read more articles like this? Sign up for our newsletter!