Why Is The Price of Water-Process Decaf Surging?
Water-processed decaf is having a moment. Over the past 12-15 months, the price of water-processed decaf (what we use for our Decaf Organic Mexico coffee) has surged upward at an even greater rate than caffeinated coffees. This perplexed me, so I looked into why. Let's unpack the factors contributing to this increase.
Demand is Shifting Towards Chemical-Free Decaf
In their 2024 Annual Report, Swiss Water explicitly says demand for chemical-free decaf is growing. While a growing uptick in caffeine consciousness is moving the demand for decaf on the whole, a few things happened in 2024 that accelerated this. The EPA banned most uses of methylene chloride, a common chemical used to create decaf. While usage in food was not banned, resulting headlines moved public / consumer sentiment away from it. At the same time, California lawmakers proposed a bill that, if passed, would ban the use of methylene chloride in the decaffeination process. Even though this bill has yet to pass, significant media coverage on the harmful effects of methylene chloride has meant more decaf coffee buyers are specifying “water process only.”
Increased competition for time slots at water-process decaf plants
There are only three producers of water-process decaf to serve much of the world, which means there is a very limited amount of coffee that can go through those plants in a given year. If time is money, then a growing number of people seeking that fixed and limited amount of time means that getting your coffee into those plants is now going to cost more. This is plain supply and demand economics at work.
Mexico’s Wages and Inflation have been Running High
The Mexican government approved a 12% minimum-wage hike for 2025 on top of big increases in prior years. As documented by Swiss Water’s report, Mountain Water decaf processors in Mexico flagged inflation in energy, packaging, shipping, and labor as persistent cost pressures. All Mountain-Water Process decaf coming through Mexico is impacted by this.
Freight and Choke Points Raised Importer’s Delivered Costs
Coffee moving into and out of these three processing plants must be shipped all around the world by boat. The Panama Canal drought (late ’23 into ’24) and Red Sea/Suez disruptions (from Nov ’23 onward) inflated global ocean costs and extended transit times. Even if you source exclusively from Mexico like us, these realities push global logistics prices higher.
Premiums Unique to Decaf Increase
Water-processed decaf requires extra handling, energy, water filtration, and drying, plus it results in weight loss (shrink) during processing. When the base coffee is expensive, the dollar value of that shrink and the inventory you have to finance through decaffeination both go up—so the premium charged for this processing over regular unroasted coffee widens.
A Rising “C” Market
As you know by now, the price of coffee has increased substantially in the past 12 months. If you missed it, I wrote several blog posts that you can find on our website that explain why: Coffee Prices Hit 48 Year High... What's Going On? & State of Coffee Update... And What's the Deal with Tariffs?
When I look at our sourcing of decaf, the market has increased 145% during the time in which we have made our last four decaf contracts, making it a significant contributor to the present cost.
Conclusions & What To Do?
Coffee is something that is remarkably impacted by geopolitics. From the minimum wage increasing in Mexico to disruptions in the Suez Canal (and much more), the cost of your beloved cup of Decaf Organic Mexico coffee is impacted. And, should global demand increase as more people seek out a decaf that does not use harmful chemicals to remove caffeine, this is likely only to further increase—until someone gets smart and builds a fourth, fifth or sixth decaf plant somewhere else to better accommodate this increased demand. (In case you missed it, that was a free business tip for the entrepreneurs reading this who are looking to solve a real problem.)
In our opinion, the decaf we are sourcing from Mexico is super tasty. To be honest, there is nothing cheaper I can buy that will not be noticeably inferior in taste. This is just a fact. And I would rather continue sourcing and roasting something that exceeds my customer’s expectation than substitute what we have now for a product that, while it may save a dollar, will disappoint you.
As we weather this moment in coffee’s history and the geopolitics impacting its cost, let’s double down on savoring the goodness we have in our cups of coffee.
Like many of you, my wife and I are solidly middle-class people. We’re weathering the same realities of rising costs, as inflation—and now tariffs—means our dollars are not going as far. Whether it is in regards to eating out, the grocery store, or what we wear, our approach has been to limit what we buy / consume rather than trade down on the quality. Like you, we work hard for what we have. And we would rather enjoy a little less of what we love than have more of something we really don’t like. We would rather eat out a few times a month at a local, independently owned restaurant serving fresh and inventive cuisine than a bunch of times at a big chain with low-quality fare. The cumulative impact of us spending our dollars with businesses owned by people in our local economy means a better city for us all.
I hope you feel the same.