Let’s try to understand why the price of coffee is increasing, what has influenced this change and what the supply chain can do to contain this increase or if it can do anything at all?
As coffee roasters we want to tell things as they are. We want to be transparent and explain why coffee, like so many other raw materials, has had price increases that have unfortunately often spilled over to bars, also increasing the price per cup
Different events and factors have led to increases throughout the supply chain, bringing us to the current situation: our intent is to create more transparency in the supply chain, from the grower to the final consumer, passing through the coffee roaster and barista. So let’s have a look at the factors that have influenced the big storm that has hit the world of coffee.
The price increase of green coffee
According to the ICO, the international coffee organization, in the two-year period 2021/22 the main coffee-producing countries decreased their production and drastically lowered their exports.
Exports from South America (Brazil and Colombia above all) decreased by a quarter (-24.4%) and the trend seems likely to continue. The production deficit is due to various causes. Climate change and the resulting climatic events, such as the severe frost that hit Brazil last summer is only one of them.
Even the Covid-19 pandemic added to an already insatiable political situation in some producing countries, as well as dollar prices, are three other elements which, added all together, increased coffee prices like never seen before.
Cost of logistics
As previously mentioned, the handling of goods has undergone great jolts in the post-Covid times: we’ve gone from forced stops on a global scale, to quick restarts, while creating bottlenecks that have complicated the normal work management.
Some Eastern markets, such as China, still have very severe restrictions: many containers, empty steel shells, are lined up on the quays of Chinese ports.
This has to be added to the big problem of finding crews and a speculation that has led to threefold increases in the cost of coffee container shipping from Brazil to Italy.
The cost of gas
Usually coffee is roasted using gas energy and is usually one of the highest costs for a roasting facility: recent increases have therefore weighed heavily on the accounts of coffee companies.
Bar costs
Also the war between Russia and Ukraine has been pushing energy prices high drastically in the past months. This cost increase is weighing heavily on bar owners
Is there a way to save money? Yes and no!
The question arises spontaneously: is there a way to lower the price of the supply chain? Sure, but unfortunately at the expense of quality. Green coffee can be bought in a range from 1 to 500 euros per kilo; we can ignore the history of the plantation and how much the farmer who grew that coffee was paid, neglect the roasting, buy an old and run-down coffee machine to make Espresso.
But is that really what you want? We’d much rather help you invest in quality. The price of coffee can only be raised if there’s a true quality behind it. We should see this specific moment in time as an opportunity to invest in coffees that have a story, quality and that support sustainability, therefore “justifying” those extra cents in the cup. Many roasters, baristas and consumers are starting to make this type of reasoning. We’re amongst them.