How Tariffs and Private Equity Are (Loosely) Connected

Two big stories dominated coffee news this week.

First, tariffs—sort of.

By now, you’ve almost certainly heard the news that the Trump administration has implemented a series of tariffs against U.S. trading partners, implementing a 10% base rate for most countries and adding additional rates to countries like Vietnam, Indonesia, and Nicaragua.

If you’re a regular reader of this newsletter, you might have noticed that the places listed above all produce coffee. As you can probably guess, these tariffs have people in the coffee world in a tizzy, questioning what they could mean for pricing and how the industry will navigate trade at what is an already-volatile pricing moment.

The tariffs were set to go into effect Wednesday, but were quickly put on a 90-day hiatus due to public outcry, and after markets plummeted. (The stock market rebounded once Trump announced the tariffs would be paused, although it’s important to note that the 10% base rate still stands.)

I plan to report on this evolving issue more soon, so I don’t want to get too deep into the specifics yet, especially as the situation remains fluid and unpredictable. We’ve also published several tariff stories over at Fresh Cup, including a live tariff tracker made by my publisher, Garrett Oden, and a report from my colleague, Fionn Pooler, in which he talked to stakeholders across the coffee supply chain about how tariffs would impact their lives and businesses.

In the meantime, we’ve seen responses from organizations like the National Coffee Association asking the Trump administration to exempt coffee from tariffs, because we don’t produce enough coffee in the United States. (As Fionn’s article points out, we grow less than 1% of all coffee produced.) Still, I can’t help but feel frustrated to see tariffs get so much attention when coffee pricing has already been in crisis for years.

I wanted to mention tariffs because a) They’re a big deal that’s dominating the news cycle, and b) I think they’re sneakily tied into the second story that dominated my social media feed this past week:

Black & White Coffee Roasters was acquired by FairWave, a private equity-backed organization that has bought nearly a dozen coffee businesses since 2020.

I think it’s important to consider why private equity is obsessed with coffee.

This obsession started long ago, with the acquisition of massive, industry-transforming roasteries like Blue Bottle and Stumptown in the mid-2010s, and it has only picked up from there. PE entered the coffee chat around the time specialty coffee was making inroads in consumer habits. In 2015, the Specialty Coffee Association reported that specialty consumption comprised 55% of the U.S. coffee market.

I remember when these stories first came out. On the one hand, I felt proud of our industry. But I also worried it made us vulnerable to actors who would see specialty only as a market from which to extract value.

The argument for private equity in coffee is generally the same as in other industries: More money will allow these businesses to do more with their sourcing, scale up, and improve workers’ lives. However, we’ve seen very little evidence of the latter claim, at least in any long-term way—I don’t know of any baristas who are on the record as saying, “Since we were acquired, my life is way better!” or farmers who are finally being paid more. I would love for any PE firm to provide data or documentation showing how their money has improved things for the people on the ground (though I suspect that, if they had that data, it would already be splashed all over their company profiles).

If you want to learn more about these dynamics, my astute colleague Fionn Pooler wrote a three-part series on private equity in coffee. One thing he pointed out was how much PE seems willing to shed the talented people who made a business what it was. Companies like frozen coffee capsule producer Cometeer and oat milk brand Oatly essentially developed their reputations in the specialty world on the back of some of the industry’s most talented and trusted workers—many of whom were later let go as profits and growth didn’t hit expected targets.

However, Fionn also acknowledged the professionalization that private equity can provide, such as higher wages and schemes like 401(k)s and paid time off, which are benefits that are lacking in most other specialty coffee jobs.

I find private equity’s interest in coffee to be pretty suspect: Why are these firms so invested in an industry that (for better or for worse) prides itself on being, well, special? The rise of specialty coffee happened due to small, independent coffee shops working with small, single-family farms. So much of the appeal of specialty still comes from this premise: You’re getting single-lot coffees in shops and from roasters with a unique point of view. What makes a specialty experience is the confluence of all these factors.

Ultimately, to feign that a capital-driven business like a private equity firm would operate under any other pretense than making money is bizarre. It’s so weird to me how these firms instead lead with claims of benevolence, like they’re fooling anyone. Wouldn’t it be interesting if FairWave instead made a statement like, “Yeah, we’re just here to acquire companies, and people might get fired if our bet to acquire XYZ business doesn’t work out?”

The bottom line: I think people are right to distrust private equity in coffee—and to be upset when those fears are met with little more than dishonest, PR-polished answers.

These two news stories might seem loosely connected, but I think both deal with narrative spinning, and what kind of messaging we’re being given versus the truths we’ve collected and observed with our own senses. Both have revealing things to say about power structures, and about the regular people who are left behind, or whose livelihoods are crushed, in the process—treated as little more than collateral damage as capital marches on.

What were your thoughts about these two coffee stories? Share your thoughts in the comments—and let me know what other topics you’d like me to report on next.