The coffee market in crisis
“How much?!”
It’s a phrase heard across the UK at the moment – the cost-of-living crisis isn’t a blip, if anything it seems to be the new normal, with price increase across the board in all walks of life. And the coffee industry isn’t immune to that. Did you know that coffee is traded on international financial exchanges in the same way as crude oil and gas? In the past few weeks, green coffee prices hit an all-time high of $4 per pound (lb). We spoke to our Head Roaster Mike, who keeps a close eye on the situation all year round, to get an idea of what’s impacting this surge.
So what’s causing this rise in the price of arabica (the main variety of coffee)? Mike says “Adverse weather conditions, particularly in Brazil, the world's largest coffee producer, have led to a significant decline in coffee output. It can’t be denied that climate change is making things unpredictable, and for any kind of crop that requires stable conditions to grow, this is a problem.”
Transporting coffee from the countries it is grown is also an expensive business. Mike explains: “Shipping costs have been impacted by demand outstripping supply, and uncertainty caused by tariff wars (thanks, Donald) plus ongoing safety issues on certain routes (yes, actual pirates), as well as increased oil prices.”
And when that coffee arrives in the UK? “Everything that goes into then roasting your coffee and serving it to you in our shops has also increased in price. Energy costs, milk costs, national insurance costs, property costs, machine parts etc. It’s a perfect storm that’s impacting everyone that sells coffee.”
The cost of buying green coffee for roasters like us has increased between 70% - 150% over the last 5 years, depending on which beans you’re buying. Mike says “We do our best to absorb those costs through other means so that we don’t have to charge customers £10 for a latte, or our Wholesale clients £50 for a kilo of beans. But the space for making savings is running out.”
How much will customers be willing to pay for a latte in the “new normal” remains to be seen. And if these costs will see businesses reverting to lower quality coffee products to balance out the financial impact? Here at 200 Degrees, we’re committed to producing coffee that tastes great but is also sustainable and traceable. If you share those values, let’s see how we can continue to weather this period of uncertainty together.
FURTHER READING
It’s a phrase heard across the UK at the moment – the cost-of-living crisis isn’t a blip, if anything it seems to be the new normal, with price increase across the board in all walks of life. And the coffee industry isn’t immune to that. Did you know that coffee is traded on international financial exchanges in the same way as crude oil and gas? In the past few weeks, green coffee prices hit an all-time high of $4 per pound (lb). We spoke to our Head Roaster Mike, who keeps a close eye on the situation all year round, to get an idea of what’s impacting this surge.
So what’s causing this rise in the price of arabica (the main variety of coffee)? Mike says “Adverse weather conditions, particularly in Brazil, the world's largest coffee producer, have led to a significant decline in coffee output. It can’t be denied that climate change is making things unpredictable, and for any kind of crop that requires stable conditions to grow, this is a problem.”
Transporting coffee from the countries it is grown is also an expensive business. Mike explains: “Shipping costs have been impacted by demand outstripping supply, and uncertainty caused by tariff wars (thanks, Donald) plus ongoing safety issues on certain routes (yes, actual pirates), as well as increased oil prices.”
And when that coffee arrives in the UK? “Everything that goes into then roasting your coffee and serving it to you in our shops has also increased in price. Energy costs, milk costs, national insurance costs, property costs, machine parts etc. It’s a perfect storm that’s impacting everyone that sells coffee.”
The cost of buying green coffee for roasters like us has increased between 70% - 150% over the last 5 years, depending on which beans you’re buying. Mike says “We do our best to absorb those costs through other means so that we don’t have to charge customers £10 for a latte, or our Wholesale clients £50 for a kilo of beans. But the space for making savings is running out.”
How much will customers be willing to pay for a latte in the “new normal” remains to be seen. And if these costs will see businesses reverting to lower quality coffee products to balance out the financial impact? Here at 200 Degrees, we’re committed to producing coffee that tastes great but is also sustainable and traceable. If you share those values, let’s see how we can continue to weather this period of uncertainty together.
FURTHER READING
A Brief History of the Price of Coffee Covoya Specialty Coffee - an interesting long read that put's today's prices into perspective.
US Coffee C Futures Price Today - Investing.com UK – Live C price market
London Coffee Futures Price Today - Investing.com UK – Live Robusta price market