Taiwan coffee shops face price hikes amid global bean crisis

Reporter Hsu Tsai Wei (徐采薇) / Business Today (今周刊) / Editor Dimitri Bruyas (Translator) / TVBS World Taiwan
Release time：2025/05/23 18:17
Last update time：2025/05/28 09:19

Coffee bean prices double, forcing Taiwan cafés to adapt (Shutterstock)

TAIPEI (Business Today/TVBS News) — Coffee, a daily necessity for many people, may soon become more expensive, as coffee bean prices have skyrocketed over the past year. Examining coffee futures trends reveals that the price per pound was only US$1.83 in January last year, but by late November it had risen to a historic high of US$3.18. This year, prices briefly surged past US$4 per pound. As of March 17, prices have slightly retreated to US$3.84 per pound, still more than double compared to the same period last year.

Extreme Weather Creates Supply Shortage

The continuing price increases stem from supply shortages. Brazil, the world's largest coffee producer accounting for 30% of global production, has faced extreme weather in recent years. Frost hit the country in 2021, followed by drought and heavy rains between 2023 and 2024, severely affecting harvests. Cocapec, Brazil's third-largest coffee cooperative, collected only about 1.1 million bags of coffee beans (60 kg per bag) from farmers last year, about 27% less than the 1.5 million bags in 2023. Cooxupé, Brazil's largest coffee cooperative, predicts production will decrease by another 10% this year.

Not only Brazil, but other important producing regions such as Colombia (哥倫比亞) and Vietnam (越南) have also seen reduced yields due to extreme weather or pest infestations, further tightening coffee supplies. Meanwhile, global coffee demand continues to grow. In Taiwan, the International Coffee Organization estimates that in 2021, each Taiwanese person drank an average of 122 cups of coffee annually. By 2023, this figure jumped to 184 cups, a 50% increase in just two years. The persistently high futures prices have already impacted Taiwanese businesses.

Starbucks Raises Prices, Convenience Stores Feel Less Pressure
Starbucks in Taiwan fired the first shot, announcing price increases starting Feb. 12. Freshly brewed espresso, Americano, latte, caramel macchiato and daily selection coffees all increased by NT$5, while tea and Frappuccino series increased by NT$10, representing increases of 6% to 10%. "The last price increase was eight years ago. During this period, prices have risen significantly. Other coffee operators probably want to raise prices too, but we just moved faster," a Starbucks insider revealed. The rising cost of coffee beans, the most important raw material, is certainly a key factor.

"We really didn't expect such a big increase! Our coffee bean inventory lasts at most three months, after which we may adjust prices," said Endy Wang (王國雄), chairman of ComeTrue Coffee (成真咖啡). He admitted that over the past year, the cost of raw materials has increased by 20%. If coffee bean prices don't decrease, businesses will inevitably have to follow suit, passing some costs to consumers. However, expecting coffee bean prices to fall seems unrealistic. Lu Yu-heng (盧昱衡), an analyst at President Futures Corp. (PFC, 統一期貨), pointed out that, beyond insufficient supply and strong demand, buyers may increase advance purchases of coffee beans based on expectations that U.S. tariffs will worsen inflation, further driving up coffee prices. If prices do increase, budget chain coffee shops will be hit hardest.

Budget Coffee Chains Hit Hardest
Industry insiders believe high-end chains like Starbucks have strong brand appeal, so price increases of NT$5 to NT$10 per item won't significantly affect consumer willingness to buy. As for non-chain specialty coffee shops, they already follow a premium model serving loyal customers, giving them more room to negotiate prices. Luke Hsieh (謝溢宸), the owner of independently operated Coffestyle (啡Style Café), admitted, "Costs have indeed increased significantly recently," but isn't overly concerned about the aftermath of price increases. However, for young business owners planning to invest in independent coffee shops who haven't yet developed a regular customer base, business model planning may require more caution.

For convenience store chains, coffee is just one of many products, so the pressure to raise prices is relatively light. The two major convenience store operators, 7-Eleven and FamilyMart, both told this magazine, "There are currently no plans to increase coffee prices." In contrast, budget chain coffee shops positioned between convenience stores, Starbucks and boutique shops, such as cama cafe, Louisa Coffee (路易莎) and 85°C (85度C), emphasize high value for money. If they raise prices hastily, customers might switch to convenience stores or competing brands, or even spend a bit more for seemingly more refined, distinctive independent coffee shops.

Cama cafe Holds Firm: Absorbing Costs for Now
Cama cafe, with nearly 160 chain stores, is hanging on by its teeth. The company admits that over the past year, raw material procurement costs have risen by more than 50%. But considering consumer interests, they're reluctant to raise prices and are currently absorbing and mitigating costs as much as possible, with adjustments to follow as the situation evolves. Alan Liu (劉人豪), former general manager of a chain coffee brand, analyzed that operators who don't raise prices yet need to control costs typically redistribute expenses, such as reducing decoration costs or cutting scheduled staff. After all, only about 20% of a cup of coffee's final retail price comes from raw materials, with the rest comprising shipping, labor, rent, and other costs.

Also, chain coffee shops might follow Louisa Coffee and Come TrueCoffee in introducing more diverse food and beverage options to increase average customer spending, or launch new flavors and limited products to offset lost profits. Looking ahead at coffee futures, Lu believes we should watch the harvest conditions during Brazil's coffee production season from May to July this year to determine whether prices might stabilize.

Wang isn't so optimistic. He analyzes that with Taiwanese convenience stores continuously expanding by 400-500 stores annually and China's Luckin Coffee (瑞幸咖啡) expanding by thousands of stores each year, coffee demand shows no signs of decreasing. "It's unlikely prices will fall in the long run. Future prices may continue to rise, so we should be mentally prepared." It seems affordable coffee is "gone for good." If demand continues to grow while production remains unstable, not only will coffee lovers' wallets shrink, but the coffee shop business may become less profitable, turning into a money game only large brands or chain convenience stores can afford to play. ◼