If you’re a daily coffee drinker, it’s difficult to overlook that the price of your preferred source of caffeine keeps grinding higher. In fact, the global price of arabica coffee has more than doubled over the past year...with a sharp upward price movement (since the start of 2025) pushing commodity prices of the cash crop to an all-time high price of more than four dollars a pound last month. So, what’s going on? While the famous cartoon character Yogi Bear would say that I’m “smarter than the average bear” when it comes to coffee futures contracts…I’d hardly consider myself as locked into the ground level details of this commodity (compared to global dairy markets). But from my understanding…this is largely a supply issue stemming from changing weather patterns that have disrupted agricultural production around the world. And this reminds me of something I started getting louder about in 2021…that most CPG companies are largely unready to handle the ingredient shortages, input cost inflation, and supply issues caused by climate change over the next decade. But that’s a good transition into the other economic variable…are all-time high commodity prices impacting U.S. consumer demand for coffee? According to the February CPI report, data showed that prices consumers paid for coffee (in all its forms) were higher 6% YoY…but was up more than 1.5% from last month. So, with higher coffee input prices not fully impacting consumer price…and coffee trade organizations reporting U.S. adult coffee consumption recently reached its highest level in more than 20 years, U.S. coffee demand has not been materially impacted YET. But from what I can see by perusing the recent earnings call transcripts of major CPG companies that own large coffee brands…retail coffee prices will continue rising aggressively into the second half of 2025. Obviously, the largest companies (meeting demand across channel, preparation, and/or format) are well-positioned and possess the strategic optionality to successfully hedge against these fluctuating business risks…but I wanted to shift this next portion of the content closer within the wheelhouse of my deep domain expertise. While I believe plain ole great tasting coffee preparations will remain a consumption evergreen for many decades to come (and likely still below its “peak consumption” point), I also think there’s an emerging arbitrage…as consumers move closer towards this four-way intersection of taste, convenience, nutrition, and functionality. Moreover, every multibillion-dollar functional CPG category (such as coffee) is in the early innings of a remarkable transformation…with consumer behavior starting to evolve towards seeking multifunctional benefits that contribute to overall wellbeing. And that’s because consumers don’t want different habits…they want more beneficial ones. But the bulk of my latest first principles thinking content will explore how coffee price inflation could have major implications to the “energy everything” movement now (and into the future). This will include examining various winning sequence of dimensions shaping the future of coffee like packing more functionality into coffee, overcoming the biggest flaws of caffeine, coffee beverages becoming status symbols or basically aspirational mixtures, representing flavor taste, lifestyle taste, and identity by association, and how various food technology innovations like precision fermentation and cellular agriculture present hopeful aid to commodity inflation.