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CONTRIBUTORS

Anujeet Sareen, CFA

Portfolio Manager
United States

A Jolt to US Consumers: Coffee prices hit an all time high in 2025, although tariffs only partially explain the recent increase. Supply concentration and natural disasters remain key risks for crop yields and ultimately, consumer prices.

Brazil Dominates the Coffee Market: Brazil is the world’s largest coffee bean producer; with Vietnam, they are responsible for 55% of global sales. Over the last year, both countries have experienced unprecedented droughts which reduced supply, causing prices to surge.

Contributions to Core Consumer Price Index (CPI): Food is only a 13.46% weighting in US CPI and experienced modest price appreciation relative to core goods and services, suggesting consumers have yet to feel acute pain of higher food and beverage prices. The bigger story in the cost of living crisis is in core services, causing consumers to make trade-offs in spending. 

Consumer Spending: The biggest weighting within US consumer spending is food and beverage stores at 20%, and 85% of that basket is comprised of groceries. After a sharp recovery in post-pandemic spending in 2023, grocery spending has not normalized to pre-pandemic levels.

Tariff Relief: US-based companies like JM Smucker have absorbed the tariff impact until now, though revenue growth in coffee and margins have been stable through 3Q25 earnings. Nevertheless, the company has publicly welcomed the recent rollback on Brazilian import tariffs as margins have been projected to compress.

DEFINITION

Not seasonally adjusted (NSA) data (shown in 3rd and 4th exhibit) refers to raw economic or statistical figures that have not been modified to remove regular, predictable, annual fluctuations

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WF: 8857811

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