Tim’s coffee just got pricier — get used to it
It was only a matter of time before Canada’s coffee chains began adjusting prices. Tim Hortons was first out of the gate, announcing a price hike of roughly three cents per cup on average—a modest but symbolically significant increase. In an increasingly cashless economy, where digital payments obscure price sensitivity, such adjustments are less likely to trigger consumer backlash. Still, this marks a new chapter in the economics of coffee, where perception and psychology play as much a role as the price of beans.
Despite common belief, the cost of coffee beans represents less than 10% of what consumers pay for a cup at their local café. The remainder is absorbed by labour, rent, equipment, and energy—costs that have risen sharply in recent years. This means that even if global coffee bean prices were to stabilize, the price of your daily latte likely would not.
Globally, coffee futures are trading about 50% higher than the five-year average, driven by production challenges in key exporting nations such as Vietnam and Brazil. Climate volatility, from prolonged droughts to erratic rainfall, has reduced yields and complicated harvest cycles. The prized arabica bean, which thrives only in narrow temperature bands between 18°C and 22°C, is particularly vulnerable. As growing regions shift to higher altitudes and pests like the coffee leaf rust expand their range, the economics of coffee cultivation have become precarious. The uncomfortable reality is that climate change is permanently reshaping the cost structure of one of the world’s most traded commodities.
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When Tim Hortons moves, others typically follow. Coffee remains the most effective “loss leader” for some chains—a product that brings customers through the door, where the real profits come from baked goods and meal combos. McDonald’s may hold out longer, thanks to its scale and ability to cross-subsidize beverages, but even it is not immune to global pressures.
At-home coffee drinkers won’t be spared either. According to Statistics Canada, coffee prices in grocery stores have risen by 32% since January, primarily due to higher import costs and global market distortions caused by tariffs. Although Canada lifted its counter-tariffs on September 1, the United States continues to impose duties on imports from Brazil, Vietnam, and other coffee-producing countries—an illogical policy, given that the U.S. has no domestic coffee industry to protect. As a result, firms are rerouting supply chains to avoid U.S. intermediaries altogether, a costly and inefficient process that inevitably trickles down to consumers.
Yet, despite these economic and geopolitical headwinds, Canadians’ love affair with coffee shows no sign of cooling. With an average consumption of 2.7 cups per person per day, Canada ranks among the top ten coffee-drinking nations globally, well ahead of the United States and the United Kingdom, according to the Canadian Coffee Association. Only the Nordic countries—led by Finland and Norway—drink more per capita. Coffee here is more than caffeine; it’s culture. Whether in a downtown espresso bar or a small-town diner, the ritual of the morning cup endures.
Still, habits are shifting. Younger Canadians are gravitating toward iced and specialty beverages, while older generations remain loyal to their drip coffee. What unites both groups, however, is the willingness to absorb small price hikes for the comfort of routine. In the end, it’s not just the economics of coffee that keep the industry robust—it’s the sociology of coffee, and the deep place it holds in Canadian life.
