Coffee prices have been on a tear. A mix of drought in Brazil, weak harvests in Vietnam, and historically low inventories has sent arabica beans soaring to more than $4 a pound, one of the highest levels in recent years. That’s a serious problem for companies that rely on coffee beans as their lifeblood. From global giants like Nestlé and Starbucks to fast-growing players like Dutch Bros, the pressure is real. But each of these companies is responding differently.

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Dutch Bros: Protecting Growth with Locked-In Prices

Dutch Bros, $BROS, the U.S.-based drive-thru chain, isn’t immune to rising bean costs. Coffee is central to its menu, so any swing in price hits margins quickly. But Dutch Bros has played it smart: it locked in its coffee supply for the rest of 2025 at around four dollars a pound. That gives the company breathing room while the market stays volatile. On the ground, that means a small hot coffee costs about $3.50, while flavored drinks can reach $13.99.

Even with hedging, tariffs on some imported beans are pushing costs up. Management has admitted that profits will feel some pressure — about half a percentage point shaved off EBITDA margins this year. Still, Dutch Bros has been raising menu prices modestly and leaning on its rapid expansion to offset the squeeze. For investors and customers, the message is clear: growth is still the focus, and rising bean costs aren’t enough to derail it.

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Nestlé: Using Scale and Pricing Power

For Nestlé, $NSRGY, coffee is more than just a category — it’s one of its flagship businesses. With brands like Nescafé and Nespresso, the company sells coffee to hundreds of millions of people worldwide. Rising bean costs and higher cocoa prices have already dented Nestlé’s margins, with the company reporting about a 60-basis-point decline in gross margin in the first half of 2025. For coffee drinkers, that shows up in your grocery cart: a pack of Nespresso pods that used to cost around $7.99 to $9.99 is now closer to $10 to $12, while Nescafé jars have inched up steadily on store shelves.

But unlike smaller chains, Nestlé has the scale and market power to pass costs along. The company has already raised prices across its coffee lines, especially in the first quarter of the year, and by the second quarter those increases were fully reflected in the numbers. Volumes dipped slightly — some consumers bought less when prices went up — but overall sales growth stayed positive, especially in North America.

In practice, Nestlé’s strategy is straightforward: use hedging to delay the worst of the price shock, and then rely on its premium positioning to justify higher retail prices. It may not drive explosive growth, but it keeps profits steady while waiting for commodity markets to cool down.

Starbucks: Holding the Line on Prices, Feeling the Pain

Starbucks, $SBUX, has taken a very different approach. Coffee costs make up around 10–15% of its total product expenses — less than at Dutch Bros — but the recent surge, coupled with tariffs and supply chain adjustments, has been enough to put serious pressure on the business. In the second quarter of 2025, Starbucks’ operating margin dropped by more than four percentage points compared to last year, a steep fall for a company of its size.

What’s striking is Starbucks’ decision not to raise menu prices further. Management has been clear that protecting customer loyalty is more important than passing on every cost increase. Instead, the company is trimming expenses elsewhere, cutting support staff, and doubling down on efficiency programs. At the same time, Starbucks continues to lean on its loyalty program and digital channels, hoping that stronger engagement will offset weaker margins. That means your Grande hot coffee still runs about $2.95 to $3.25, and popular drinks like lattes or Frappuccinos remain in the $5 to $6 range.

The result is that Starbucks is feeling the most pain in the short term. Profitability is under pressure, analysts have cut their outlook, and the turnaround plan will take time. But the bet is that keeping prices steady today will keep customers in stores tomorrow, preserving the brand’s long-term health.

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The Bigger Picture

All three companies are navigating the same storm, but their responses show the different tools they have at their disposal. Dutch Bros is growing fast and using fixed contracts to shield itself from the worst of the price spike. Nestlé is passing costs to consumers, using its global scale to protect margins. Starbucks, meanwhile, is absorbing much of the hit itself, prioritizing loyalty over immediate profit.

The lesson for investors and customers alike is simple: when a commodity as fundamental as coffee gets this expensive, no company escapes unscathed. What matters most is how they balance cost pressures with brand strength. And for now, each of these three leaders is making very different choices.