Italian coffee roaster Lavazza has delivered a sobering message to caffeine lovers: don't expect prices at the supermarket to drop anytime soon. The company says that volatile bean costs, combined with the threat of a 'super El Niño' weather pattern, are keeping retail prices elevated for now.
Why coffee prices are stuck
Coffee futures have been on a rollercoaster ride. They climbed through 2024 and hit record highs in early 2025 after weather problems—including drought and frost in key growing regions like Brazil—squeezed global supply. While prices have eased somewhat this year, they remain historically high. On Monday, Reuters reported that coffee futures jumped again as traders reassessed climate risk tied to an expected super El Niño.
Lavazza points to two main factors keeping prices from falling. First, the anticipated super El Niño could bring extreme weather to coffee-growing areas, threatening next season's harvest. Second, there's a months-long lag between what roasters pay for green beans and what consumers see on store shelves. Even if bean prices drop, it takes time for those savings to trickle down to retail.
What is a super El Niño?
El Niño is a natural climate pattern that warms ocean temperatures in the Pacific, often disrupting global weather. A 'super' El Niño is an especially strong version, which can cause severe droughts in some regions and floods in others. For coffee, that means potential damage to crops in major producers like Brazil, Vietnam, and Colombia. The last strong El Niño in 2015-2016 contributed to a spike in coffee prices.
This uncertainty is keeping the market on edge. Traders are pricing in the risk of supply disruptions, which pushes futures higher. That volatility then ripples through the supply chain, from roasters to retailers to consumers.
What it means for investors
For everyday investors, this story is a reminder of how commodity prices can affect the companies you own—and the prices you pay. Coffee is a global commodity, and its price is driven by supply and demand, weather, and geopolitical factors. When bean prices rise, roasters like Lavazza, Nestlé, and JDE Peet's face higher costs. They can either absorb those costs (hurting profit margins) or pass them on to consumers (which they've been doing).
If you hold shares in food and beverage companies, keep an eye on their input costs. Companies with strong brands and pricing power—like Starbucks or Nestlé—can often pass on higher costs more easily than smaller players. But persistent inflation in raw materials can still squeeze earnings.
For those invested in coffee futures or exchange-traded funds (ETFs) that track commodities, the volatility is a double-edged sword. Prices could spike further if El Niño materializes, but they could also fall sharply if weather conditions improve or if demand weakens due to high prices.
Broader market context matters too. Rising commodity prices can feed into overall inflation, which influences central bank policy. Higher coffee prices alone won't move the needle, but they're part of a broader trend of volatile commodity markets. For example, oil prices have also been volatile due to geopolitical tensions, and aluminum prices have been squeezed by low inventories. These cross-currents create a complex environment for investors.
What to watch next
Investors should monitor weather forecasts for coffee-growing regions, especially Brazil and Vietnam. Any signs of a strong El Niño could push futures higher. Also watch quarterly earnings reports from major coffee companies for commentary on input costs and pricing strategies. Finally, keep an eye on retail coffee prices—if they start to fall, it could signal that the volatility is easing.
For now, Lavazza's message is clear: the coffee market remains in a state of flux, and consumers shouldn't expect relief at the register anytime soon. That's a bitter pill to swallow for coffee drinkers, but for investors, it's a reminder to stay informed about the forces shaping global commodity markets.
