Most people have an idea of how much a cup of coffee should cost. The exact number depends on where you are in the country, whether you buy it from a chain store or a separate cafe, but coffee is one such as a pint of milk or lager. This is too expensive.
That’s why it makes the current situation so difficult for roasters and baristas. Raw coffee bean prices are rising, frosting in Brazil and partly due to the blockade in Vietnam.
This has a knock-on effect on the entire supply chain, putting pressure on profitability when other costs are rising. Still, the companies that sell our coffee every day say they are reluctant to raise prices.
“Covid has hit people’s disposable income,” says Mark Flanagan, a former rugby league player who co-founded Manchester Black’s coffee and brunch spot, Pot Kettle Black.
“When you offer the price to your customers, you see that there is a £ 3 mental barrier. [for a latte].. That’s a big step. Many fine coffee shops are hesitant to go beyond that. “
However, if current price trends continue, coffee shops and retailers may have few options. Currently, the industry is concerned about the long-term damage caused by bad weather in Brazil.
If farmers are forced to cut off trees at their roots after frost or drought, production can be delayed by up to three years before new trees bear fruit.
“This is a folk tradition of Brazilian frost green coffee,” said Phil Schluter, managing director of Olam Specialty Coffee Europe, a leading green coffee trader and unroasted green beans. “It last happened in 1992.”
Due to the frost, the market expects a global deficit in coffee, which is pushing up headline prices, he says. The next test is whether Brazil will get the rain it needs this month. Otherwise, the impact of drought on crops can make the market even hotter.
So how do all of this permeate coffee lovers?
Schulter said the flavor profile is considered good and higher prices could take longer to hit consumers when it comes to specialty coffees that may be served at local independent coffee shops. It states that there is.
Buyers are already paying a premium in addition to the market price to reflect the quality of the coffee, and Schulter says traders can adjust this difference if they don’t want to lose their customers. However, at some point, price increases are inevitable. “Consumer prices and coffee prices need to rise in all sectors, but rising disciplines will have less impact than rising commodity coffee.”
Roasters that buy green coffee, prepare it for brewing, and wrap it are the next step in the chain.
“It’s very fragile at this point,” says Roosa Jalonen, head of production for London’s roaster and coffee shop chain The Gentlemen Baristas.
While she and her team are closely watching what is happening in Brazil, there are other factors to consider, such as a shortage of shipping containers.
“We are not only dealing with rising prices at the actual price of Arabica beans, but also the entire pandemic,” she says.
The price of commodity coffee was hit first, but the impact is now being seen in the price of specialty coffee, she says.
Lisa Lawson, founder of Dear Green Coffee Roasters in Glasgow, says her business is trying to stabilize prices as the coffee market fluctuates.
“In such a competitive market, we tend to absorb the increase because we want to keep the prices of our cafe customers as stable as possible,” she says.
For her, the moments of truth are April and May, when the November harvest lands.
“These are the crops we are really worried about right now and we expect their prices to be higher,” she says.
Still, her business faces other challenges, such as shipping delays, but Ms. Lawson and other roasters are hesitant to pass on costs to cafes and restaurants where they buy their products.
“Customers were hit hard during the pandemic. The last thing we want is to hit them,” she says.
For hospitality bosses, coffee suppliers are already dealing with staff shortages and rising food prices, so it would be welcome if they could refrain from raising prices.
These are the challenges identified by Paul Smith of Brighton’s coffee shop Black Mocha, and also the VAT and rent burden.
“I think everyone in the industry wants to raise their prices,” he says.
Smith hasn’t seen the price of coffee rise significantly yet, but he wants to “dodge bullets” by roasting his own coffee rather than buying everything from the roastery. I’m out.
“It’s a big savings for us,” he says, and considers more cafes taking similar steps on their own, as cost cocktails make it attractive to save as much money as possible. I added that.
However, some coffee companies decided to chew that particular bullet to raise the price. Henry Ayers, co-founder of The Gentlemen Baristas, says his business has raised prices for the first time since its opening in 2014.
A cup of coffee from one of its branches is now 5p to 10p higher.
“It’s interesting how good the reaction was,” he says. “Everyone was very tolerant.”
Ayers argues that the blockade has improved consumer appreciation for coffee and hopes it will continue. “People have been educating themselves, wondering how they can do it themselves, saying they are missing their flat white or pouring in the morning. rice field.”
Throughout the industry, in-depth knowledge of this product is expected to mitigate the impact of price increases, especially for specialty coffee consumers.
“It’s similar to many other industries like craft beer,” says Tom Saxon, founder of Batch, a coffee subscription service launched at the time of the first blockade.
“I think people are generally starting in the UK to let go of a little more money for quality, away from the convenience of supermarkets.”
Ultimately, many coffee industry insiders consider this a good thing, even if it means short-term distress for their end customers. That’s because higher prices should benefit the most disadvantaged people in the coffee supply chain: producers.
“As a coffee community, we live with the perception that coffee prices are too low,” says Schulter of Olam.
“Producers are people in the chain who live on the lowest standard of living. As a community, we are very happy to see the prices go up.”
The coffee industry is accustomed to circulation, and Schulter says supply and demand is final as more farmers start growing coffee to fill the gap, even if prices continue to rise due to low yields. It states that it will solve the problem.
The long-term question is whether coffee drinkers around the world can cope with these price increases in the long run, if it means better conditions for the people on the other side.
As Dear Green’s Ms Lawson says, “If people want ethical coffee, they have to pay for it.”