Americans love their coffee with nearly 75% drinking at least a cup a day.
“It is number one in America behind water. Tea is the rest of the world, but in America it's coffee,” saidDan Beihoff, owner of Eagle River Roasters.
Beihoff goes through about 50 to 60-thousand pounds of coffee a year which puts the roastery in the small batch artisan roaster category. The coffee is sold in the front of house coffee shop as well as shipped to people, stores, and other coffee shops across the country.
Beihoff has been in the business for the last 20-plus years—the last decade has seen some larger swings in bean prices with it now at its highest price in history.
“For me as a roaster, that's difficult to work with because we can't change prices the way gas stations change prices,” said Beihoff.
A lot of that price increase has to with beans being traded as commodity—its subject supply and demand, weather events, and global economic conditions.
“If Brazil sneezes, the rest of the world coughs, because Brazil is growing so much of the world's supply,” said Beihoff.
On top of that, the 10% tariffs on all countries went into effect in April, which meant it once again cost Beihoff more to buy beans and even things like to go cups and lids.
Because of all these factors, Beihoff has put a temporary 6% surcharge on all sales while taking on the rest of the increase.
“I'm trying to stay in business. I want to be here next month, next year,” said Beihoff. “I've got to pass it along to the consumer, because ultimately, it did land at my doorstep.”
As a small business, Beihoff says he feels these changes almost immediately and doesn’t have the resources that large chains or corporations have access too.
He’s hardly alone in raising prices. Coffee roasters and shops in Alabama, Pittsburgh, and Minnesota have all been impacted.
UC Davis Professor and economist Christopher Meissner says that’s going to likely be the same for most small businesses.
“Generally, over the long run, they’re going to have to raise their prices, and their costs are going to go up as inputs cost more to import, or just general prices drive the wage bill up,” said Meissner during a Global tariffs, local impacts panel by Sciline.
Hawaii is the only state that grows coffee beans, and it can’t grow enough to meet U.S. demand, meaning it has be imported.
Beihoff says some organizations are lobbying to get tariff exemptions for coffee for this reason.
He hopes it comes sooner than later as a 50% tariff on Brazil—the largest coffee bean exporter in the world—recently went into effect.
“I can't price for that. I can't say, “Look, you know, it's going to run you 50% more for your drink tomorrow because this now has gone into effect,’” said Beihoff.
He hasn’t seen the impact of that latest tariff yet as suppliers did try to stockpile before the tariff went into effect. But Beihoff knows it will cause a change if it remains.
“I have to look at purchasing less or no Brazil coffee, because I can't absorb it, and I can't ask my customer to absorb that either,” said Beihoff. “We're looking for viable alternatives, and Brazil is a really nice coffee that's used as a component in our espresso. We use it as a base in our flavoring.”
While the changes can be hard for a small business like Eagle River Roasters, Beihoff says there are advantages like the ability to adjust the coffee taste because he works with smaller batches.
What Beihoff doesn’t want to do is compromise quality.
“I want to continue to offer the best. You're expecting it. If you still want it, it's going to cost a little bit more right now, but we're both hoping that's going to change,” said Beihoff.
Beihoff has the surcharge notice clearly posted around the coffee house, at the register, on the receipt, as well as online.
If their busy summer season was any indication, customers have been understanding and willing to pay for a product they love.
“Our online sales have actually increased, some of the same customers that have been buying from us for years. It shows up on their ticket as a line item there, and they keep reordering,” said Beihoff. “I think when you recognize that it's the best and you're enjoying it, that's a couple of bucks right now, but maybe that will change. The advantage of being able to do this on a small-scale basis is I have full intentions of pulling this back out when and if it changes.”
