Coffee Prices on the Rise
Green coffee beans (unroasted coffee bean) prices have jumped on the world markets over the last 12 months and that increase in price is now a reality for us in New Zealand.
As these price increases affect us all, I thought it would be a good idea to look at the key drivers responsible.
Rising demand by emerging markets, disappointing coffee harvests and speculative investing in the coffee futures market have caused the price of wholesale green beans to nearly double in the last 12 months, reaching highs not seen since 1977.
Emerging markets such as China, Brazil, India and Latin America are outstripping average worldwide demand (which is currently rising 2% per annum) by three to five times. The developing nations with growing middle classes are willing to pay for higher quality beans.
Coffee harvests have been hit with inclement weather which is affecting crops and shipping due to infrastructure damage. Colombia’s coffee crop has been reduced by pests and plant diseases. Other main growers such as Brazil, Vietnam, Mexico and India amongst others have all experienced lower harvests.
Investors are trading coffee futures to capitalise on the profit opportunities which has driven prices up further.
As an overview worldwide coffee production in 2011-2012 is predicted to be about 131 million 60kg bags, while demand will be about 135 million bags. So while demand outstrips supply we need to be ready for more potential price increases.
What can you do?
If you are running a café you need to look very carefully at your coffee pricing. With milk prices increasing and coffee bean increases you will need to recoup that cost in your pricing.
Make sure you are using standardised cups to reduce waste and costs.
Keep your customers informed about increases, there is a lot of information online about this that you can print off and have on hand. The national media have had news items televised recently discussing the possible cost of a cup of coffee by the end of 2012. So people are being made aware of these issues.
If you have any questions or need any help regarding your pricing or standardising your cups, please contact us by clicking here
Cheers
Wade
Category: Blog