The coffee industry is facing unprecedented financial pressure. Green coffee prices have more than doubled, credit rates are climbing, and business costs – ranging from energy to logistics – are at record highs.
In this landscape, managing cash flow has become more challenging for roasters. Once fairly predictable, financial planning and budgeting are now increasingly complicated, straining margins and forcing roasters to seek alternative financing models.
I spoke to Bavo Vandenbroecke, Sales Manager at Sucafina NV; Jan Komarek, Head of Coffee and Green Coffee Buyer at Bailies Coffee Roasters; Kat Nolte Ferguson, Managing Director at Sustainable Harvest; Suyog Mody, the co-founder of Driftaway Coffee, and Will Corby, Director of Coffee & Social Impact at Pact Coffee, to understand how their businesses and clients are navigating these hurdles.
You may also like our article on how roasters can compete on more than price.
How rising business costs are squeezing margins
The surge in coffee prices has had ripple effects throughout the supply chain. Producers, who typically hold vulnerable positions in the coffee trade, are receiving more money. Some (but not all) are able to reinvest in their farms; however, many are still at the mercy of market volatility.
Roasters and traders are feeling the immediate impacts. Many rely on short-term loans to cover the costs of large coffee purchases, so as arabica futures remain near record highs, they are struggling to secure sufficient financing. Because the risks associated with lending have increased alongside coffee prices, banks and financial institutions are tightening credit lines and enforcing stricter conditions.
“Historically, we relied on a mix of cash reserves and bank loans,” says Jan Komarek, Head of Coffee at Bailies Coffee Roasters in Belfast, Northern Ireland. “But the current market conditions have forced us to rethink our approach.” He explains that Bailies has secured a stocking facility, allowing the roaster to finance coffee purchases as it imports them and to repay the credit gradually as it sells.
Many coffee businesses are currently being forced to make tough and often uncomfortable decisions. Retail price increases are inevitable to avoid absorbing the higher costs of green coffee, but some are hesitant to implement them.
“Some roasters are limiting price increases for roasted whole bean coffee, which means taking a hit in the short term in the hopes that green coffee prices go down,” says Bavo Vandenbroecke, sales manager at green coffee trader Sucafina NV.
Waiting for the market to drop, however, is unlikely to be an effective strategy. Low inventories, soaring prices, and pressure to secure supply means further delaying purchases only increases their risk exposure.
“In addition to high green coffee prices, credit is now worth less and is extended with more precaution,” Bavo tells me.
Rising operational costs have also put additional pressure on roasters. Energy costs are predicted to increase by a further 7% in 2025, while logistics expenses, packaging materials, and food prices have all increased.
“The cost of running a roasting operation isn’t just about coffee. Packaging, rent, and wages are all going up, and that makes it harder to maintain profitability without adjusting our financial strategies,” Jan says.
Cash flow management is now more complicated
With high costs squeezing margins, some roasters are walking a finer line between profitability and financial strain, pushed to seek new ways to mitigate risk and manage cash flow.
Jan explains that Bailies maintains a buffer of green coffee stock. “This acts as a cushion before we start consuming higher-priced coffees,” he says. “But it’s a double-edged sword; if prices drop, our costs stay high for longer, plus we pay interest on borrowed financing.”
For Suyog Mody, the co-founder of Driftaway Coffee in New York, US, the impact is still on the horizon. “We buy 80% or more of our coffees via forward contracts, so we haven’t felt the full effect of rising prices yet,” he says. “But we know the next round of contracts will come at a US $2 or more per pound premium, so we’re keeping capital expenses minimal to maintain cash flow flexibility.
“We raised prices in fall 2024, anticipating rising costs,” he adds. “Since our primary channel is D2C, we can directly communicate pricing changes and market shifts to customers, which helps with transparency and retention.”
At the same time, the challenge of cash flow isn’t just about balancing books; it’s also about forecasting. Many roasters are now investing in financial planning strategies to help anticipate market fluctuations.
“Cash is tight in both the industry and the trade, but roasters who adapt well manage their cash flow closely,” says Kat Nolte Ferguson, the Managing Director at specialty coffee importer Sustainable Harvest. “They watch their overheads and can quickly pivot away from discretionary expenses without cutting into the authenticity of their brand or the essential operational expenditures.
“Roasters who can adjust final product prices in line with green coffee costs are under less pressure than those who have finalised product prices without locking in green coffee purchase costs,” she adds. “The slow reaction to green price increases from distributors, who are often high-volume, low-margin channels for roasters, puts added pressure on roasters’ cash.
“It’s important to note that traders also find themselves tight with money and won’t be able to offer credit and indefinite carrying of goods as they have in the past. Much of the roaster community is financed in part by trade credit and should look to diversify away from that if possible.”
Rethinking sourcing strategies
Market volatility presents roasters with two options: rethink their green coffee purchasing strategies or commit to models they are already using.
“We always purchase well in advance, giving producers confidence in their sales,” Jan says. “If we refuse, we risk them selling to someone else.”
Suyog echoes this, saying he continues to prioritise forward contracts over spot buying: “From my conversations in the industry, it seems like US $4 is the new expected floor for the C market, so committing to future contracts provides stability.”
Another key consideration is balancing quality with cost. Some roasters have switched to sourcing past crop green coffee or incorporating more high-quality robusta in their offerings to manage margins more closely.
“In Europe, some roasters are rethinking their product line and seeing where they can allow for lower grades or incorporate robusta. Roasters do what importers do: offer different products and buy according to what they can sell,” Bavo explains. “That means that an alternative, cheaper blend is now part of their offerings, which often wasn’t the case before.
“Some roasters are investing in sorters or destoners to get the best out of lower grades, but generally, we do see that buying new crop coffee is still important.”
Others have doubled down on specialty offerings. “The difference between commercial and high-end specialty coffee has never been this small,” Jan says. “Now is the time to stand out with quality, not cut corners.”
Bavo notices similar trends, saying: “The market for higher-end specialty coffees hasn’t been affected much, and we see roasters are still happy to commit to buying their favourite lots up front. The incentive is that importers are reducing their stock as it is expensive to carry and, as such, encourage contracting ahead.”
Additionally, roasters are focusing on better supplier negotiations to secure more favourable payment terms. Some are extending their supplier payment periods, while others are working with multiple vendors to diversify their risk. These adjustments help ensure they can maintain inventory while keeping their financial obligations manageable.
“If a farmer can receive US $4+ per pound on the commodity market, we’re not going to stand in their way. Instead, we’re paying these prices, too,” says Will Corby, Director of Coffee & Social Impact at Pact Coffee in the UK.
“Yes, these prices are high, but we need to be in a position as an industry where we can make it work; it’s required for coffee production to be sustainable for farmers,” he adds. This underscores the importance of financial agility in a market where conditions can shift rapidly.
Seeking new financing models and revenue streams
Securing external funding is an essential part of cash flow management. Suyog says Driftaway opts for working capital rather than seeking angel investment or crowdfunding.
“We’ve structured our business to manage cash flow seasonally, so we don’t rely on external funding,” he explains. “Small and medium-sized players in grocery are struggling, while D2C models feel relatively insulated. Wholesale is turning into a ‘who can hold out the longest’ game.”
Venture capital and crowdsourcing platforms are emerging as alternative ways for coffee businesses to access capital. Angel investors (who invest their own money in a company in exchange for a minority stake) and impact-driven financing could also prove popular for smaller specialty coffee brands.
To mitigate financial pressures, some roasters are also creating new revenue streams. Jan says Bailies operates a private label business but remains primarily focused on D2C coffee products.
“We believe that despite the challenges, coffee roasting should still be a profitable business,” he tells me. “We just need to ensure we provide great coffee and service at a fair price.”
What can we expect for 2025?
One thing is unavoidable this year: roasters need to increase their retail prices.
“Coffee simply can’t be bought cheap anymore. Soon, shoppers will be parting ways with around £15 for even a jar of commodity-grade instant coffee,” Will says. “Ultimately, our prices are rising, but the percentage price rise for businesses that have been buying coffee for cheap for too long will be far greater.”
However, there could be a potential silver lining for specialty coffee brands. “This means customers can now make a significant upgrade to specialty coffee without much of a step up in price,” Will adds.
But the question of how much consumers are willing to pay remains.
“Every brand will need to ask themselves what matters more to their customers: quality or price. Even price-driven roasters will have to increase prices with a rally to a US $4+ market,” Kat says. “Specialty has to trade higher than commercial to incentivise all the weight loss associated with higher quality green. So if true specialty needs to pay $5 to $6/lb for green, will consumers turn back to lower quality coffee?
“These market conditions might challenge the paradigm we’ve been operating under that once consumers start drinking higher-quality coffee, they never go back.”
The future remains uncertain for now, but one thing is clear: coffee roasters must be strategic, adaptable, and transparent to navigate the financial challenges ahead.
Whether through forward contracts, diversified revenue streams, or direct customer communication, each business will find its own way to stay resilient in an increasingly volatile market.
“This price correction is long overdue,” Will concludes. “It’s tough for roasters now, but it’s making coffee production more sustainable in the long run. The industry must adjust to this new reality.”
Enjoyed this? Then read our article on how record coffee prices signal a new era for the industry.
Photo credits: Sucafina
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