𝘚𝘵𝘢𝘳𝘣𝘶𝘤𝘬𝘴 𝘴𝘩𝘶𝘵 𝘪𝘵𝘴 $20 𝘮𝘪𝘭𝘭𝘪𝘰𝘯 𝘧𝘭𝘢𝘨𝘴𝘩𝘪𝘱 𝘳𝘰𝘢𝘴𝘵𝘦𝘳𝘺 𝘪𝘯 𝘚𝘦𝘢𝘵𝘵𝘭𝘦. 𝘊𝘭𝘰𝘴𝘦𝘥 𝘩𝘶𝘯𝘥𝘳𝘦𝘥𝘴 𝘰𝘧 𝘭𝘰𝘤𝘢𝘵𝘪𝘰𝘯𝘴. 𝘈𝘣𝘴𝘰𝘳𝘣𝘦𝘥 $1 𝘣𝘪𝘭𝘭𝘪𝘰𝘯 𝘪𝘯 𝘳𝘦𝘴𝘵𝘳𝘶𝘤𝘵𝘶𝘳𝘪𝘯𝘨 𝘤𝘰𝘴𝘵𝘴. 𝘛𝘩𝘦 𝘵𝘳𝘪𝘨𝘨𝘦𝘳 𝘸𝘢𝘴 𝘴𝘰𝘮𝘦𝘵𝘩𝘪𝘯𝘨 𝘧𝘢𝘳 𝘢𝘸𝘢𝘺 𝘧𝘳𝘰𝘮 𝘢𝘯𝘺 𝘣𝘰𝘢𝘳𝘥𝘳𝘰𝘰𝘮: 𝘳𝘢𝘪𝘯 𝘵𝘩𝘢𝘵 𝘥𝘪𝘥 𝘯𝘰𝘵 𝘧𝘢𝘭𝘭 𝘪𝘯 𝘉𝘳𝘢𝘻𝘪𝘭.
This is the story of how a weather event on one continent reshaped operations decisions across the entire global coffee industry, and it carries a lesson for anyone who depends on a single commodity.
The chain of events:
a) Multi-year drought in Brazil, source of nearly 40% of the world's coffee, wiped out close to 15% of global Arabica supply in the 2024-25 cycle.
b) Vietnam, the top producer of Robusta, faced its worst drought in 70 years, then floods.
c) Arabica futures hit $4.41 a pound in 2025, the highest in decades.
d) US import tariffs of up to 50% on Brazil, Mexico, and Vietnam landed on a product that is 99% imported with no domestic alternative.
Then came the twist. By early 2026, Brazil swung to a record harvest of roughly 70 million bags, and prices crashed back toward $1.20 a pound. From famine to flood, in under a year.
How companies responded reveals two very different operations playbooks:
a) Nestle used its multi-tier portfolio as a shock absorber, quietly moving price-sensitive buyers from premium Nespresso pods down to budget Nescafé soluble, keeping them inside the family instead of losing them.
b) JDE Peet's passed a 19.5% price increase straight to consumers and watched volumes fall, a textbook price-volume trap.
c) Starbucks absorbed the shock through restructuring rather than pricing, protecting the brand at the cost of margin
Three takeaways for operations leaders:
1) A portfolio is a hedge. Nestle could move customers across price tiers because it built the range before the crisis, not during it.
2) Passing through every cost increase is not a strategy. JDE Peet's shows the limit of pricing your way out of a supply shock.
3) Volatility, not just shortage, is the real enemy. The whipsaw from $4.41 to $1.20 hurts planning more than a steady high price ever would.
If your most important input doubled, then halved within a year, would your business be built to ride that swing, or be broken by it?
Image Credit:
@BusinessInsider @Reddit Patch.com
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