Coffee prices are soaring and caffeine addicts are switching vices

Soaring coffee prices are not driving caffeine fiends away from their vices. They’re just changing how they get their fix.

With the median price of a regular cup of coffee in the U.S. up nearly 20 percent since early 2023, according to data from Toast, people are maintaining their daily coffee habit by choosing more affordable options like drive-throughs or home-delivered beans.

Prices for high-end arabica beans, popular with chains like Starbucks, have soared over the past year and more than doubled over the last two decades, driven by poor weather in Brazil and tariffs. Costs have remained high even after recent trade relief as global supply constraints and strong demand continue.

How people adjust to higher coffee prices depends on whether they see it as a must-have fuel or a luxury, with enthusiasts and casual drinkers making different choices.

A global survey of 1,900 coffee consumers across the globe by Citigroup in October found that rising prices have led 37 percent of people to brew more coffee at home, with similar trends in the U.S., Australia, China, Thailand, and the U.K. Among those not yet brewing at home, about two-thirds expect to start within the next year.

Trade Coffee, based in the U.S., which traditionally catered to enthusiasts buying whole beans, has seen new customers drawn to its cold brew products for the cost savings, Jessica Crystal, the company’s director of growth marketing, told Bloomberg.

As budgets tighten, affordable private-label coffee brands are becoming more important, as they provide even cheaper options for home made options. Private-label bradnds are produced by roasters but sold under a retailer’s own brand name.

Trade tariffs on imported coffee have contributed to rising U.S. coffee prices by increasing costs for roasters and distributors. These tariffs act as taxes on beans from major producers like Brazil and Vietnam, making imports more expensive and adding pressure along the supply chain. Even when tariffs are partially suspended or reduced, relief is often temporary, and prices remain high due to ongoing global supply constraints and strong demand.

As established chains like Starbucks and Tim Hortons experienced declines in per-store visits from January to November compared with the previous year, 

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 across the U.S that specialize in cheaper drive-through and convenience store coffee are seeing growth, Bloomberg reports.

Starbucks Chief Executive Officer Brian Niccol said earlier this year that the company’s three business segments, in-store, drive-through, and digital, are each “substantial on their own,” and that customer perceptions of value had strengthened across all three, helping snap a six-quarter decline as established stores, Bloomberg reported.

A Tim Hortons spokesperson told the outlet that it serves both coffee and other food options “with strong everyday value that is highly competitive versus our peers.”

Analysts note that expanding chains have successfully kept prices for the average cup of coffee or coffee-based drinks relatively low, benefiting from growing populations in rural and suburban areas where coffee shops are less dense.

Smaller chains are also capitalizing on these trends. 7 Brew Drive-Thru Coffee, for example, is opening new stores to meet rising consumer demand.