Coffee Prices Are Rising: Here’s How Office Coffee Providers Can Keep Brewing Success

Hold onto your coffee mugs — coffee prices have shot up to their highest levels since 1977! Thanks to weather issues in coffee hotspots like Brazil and Vietnam and uncertainty over the EU’s Deforestation Directive (EUDR), the price of coffee has been climbing fast. Arabica futures jumped by 70% this year, and everyone in the coffee supply chain — roasters, traders, and even you, the office coffee providers — are feeling the heat.

So, what does this mean for your office coffee service business? As costs rise, you must decide whether to pass on these costs to clients or absorb them, risking margin erosion. Don’t panic, we’ve got some ideas to help you keep your coffee game strong. Let’s dive into how the price surge is affecting the industry and what you can do to keep your customers caffeinated and your margins intact.

What’s Brewing Behind the Price Surge?

There are a few key factors causing coffee prices to rise:

• Adverse Weather Conditions: Brazil’s droughts and heatwaves have harmed crops, and Vietnam’s weather challenges are further tightening supply. Less coffee is being produced, which means higher prices.
• EU Deforestation Directive (EUDR): The EUDR, which aims to reduce the environmental impact of coffee production, has traders and roasters scrambling to stockpile beans. This uncertainty around future regulations is driving up prices even more.
• Rising Production Costs: Farmers are facing higher costs for things like labor and fertilizers. Many are opting to sell to the highest bidder and rejecting long-term contracts with roasters, which creates tension in the supply chain.

How Does This Affect Office Coffee Providers?

If you’re in the business of supplying office coffee, you’re feeling the squeeze in several ways:

• Higher Costs at Every Step: As prices rise at the roasters and suppliers, those increases get passed down the line to you. And if your clients are locked into long-term pricing agreements, you might find yourself stuck with rising costs and shrinking margins.
• Potential Margin Squeeze: Without the flexibility to adjust prices, you might end up eating those price hikes and losing out on profits — especially if you’re a smaller provider without the buying power of the big guys.
• Client Sensitivity: Businesses are already dealing with inflation and rising operational costs. Adding higher coffee prices to the mix could make your service seem less attractive. Those who understand the volatility in the coffee market may be more open to price hikes if you explain the reasons behind them. However, communication is your secret weapon either way.

Smart communication and strategic planning are your secret weapons for turning rising coffee prices from a challenge into a business opportunity.

Office Coffee Providers Must Adapt to Rising Prices

What should office coffee providers do to stay in business, but keep customers happy? Let’s dive into some strategies to help you stay ahead of the curve.

1. Be Transparent with Clients
   Orrin Huebner, office coffee consultant, former office coffee business owner, and CEO of Orrin Huebner LLC, has over 40 years of office coffee experience and remembers the price surge the industry had in 1977.  He said, “Communication is EVERYTHING. Whether you’ve already seen price hikes or are just anticipating them, start talking to your clients now. Explain what’s going on in the coffee world — weather disruptions, the EUDR, supply chain craziness — and why price increases are inevitable. Help them understand that you’re doing your best to keep things affordable. Be the coffee expert they rely on!”
2. Adjust Your Pricing Model
   If your contracts are flexible, now might be the perfect time to adjust pricing. Communicate clearly with clients about the reasons behind price increases, such as higher raw material costs and global supply chain disruptions. Consider adding a price adjustment clause to future contracts to help you respond gradually to coffee market fluctuations.
3. Offer Tiered Coffee Options
   Offering a mix of arabica and robusta coffees at different price points can help clients keep things affordable while still serving up a great coffee experience. Robusta is cheaper to produce, and offering it as an option can help keep prices competitive.
4. Leverage Long-Term Contracts & Bulk Orders
   Long-term contracts or bulk orders can give your clients a chance to lock in lower prices while giving you the predictability you need in a volatile market. This ensures a stable supply of coffee and consistent business. Everyone wins!
5. Introduce Coffee Subscriptions or Custom Packages
   Offering a coffee subscription where clients lock in rates for a set period can give them peace of mind while helping you manage pricing and cash flow. You can also create custom packages that allow clients to choose their preferred coffee type and quantities, keeping things tailored to their needs.
6. Emphasize the Value of Premium Coffee
   Yes, prices are going up, but this is also a great opportunity to remind clients about the value a great cup of coffee brings to the workplace. High-quality coffee boosts morale, keeps employees productive, and shows you care about their well-being. Many clients may appreciate the investment in high-quality coffee, especially if it’s ethically sourced and contributes to employee satisfaction.
7. Diversify Your Offerings
   Don’t just stop at coffee – expand your offerings by adding tea, hot chocolate, or cold brews to your menu. By diversifying your range of beverages, you can create additional revenue streams, give your clients a variety of options to fit their budgets, and help balance fluctuations in coffee prices.

By staying proactive and agile, you can not just survive market shifts, but strategically outmaneuver the competition.

The Bottom Line: Keep Calm and Brew On

Yes, coffee prices are on the rise, but that doesn’t mean your office coffee business has to go down the drain. With proactive communication, a bit of flexibility, and a few smart strategies, you can continue delivering high-quality coffee without losing your shirt (or your clients).

As Orrin Huebner put it, “See this as an opportunity. Take a deep breath, put a great plan in place, and over-communicate every step of the way.”