Coffee, always more expensive?

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Update on the green coffee trade and the impact on our consumption

As a consumer of specialty coffees, you have no doubt seen the price of your sachet of coffee soar over the past two years. Covid, market mechanisms, war… Why and how are we impacted and what should we prepare for?

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Specialty coffee, apart but dependent on the convenience market

Although outside the stock market system, it would be wrong to think that specialty coffee does not follow market economy mechanisms. Intermediaries, supply and demand, speculation are part of the game of the exchange of any commodity. Although we are not solely governed by these practices, we sometimes suffer the indirect consequences.

For the past 20 years, the coffee market has experienced exchange rates well below production costs thanks in particular to supply exceeding demand. For more than two years, the relationship has been reversing, the courts have been increasing exponentially to finally reach liveable exchange rates for the players.

The decrease in production and the increase in demand are also responsible for the rise in prices… manufacturers are falling back on certain batches of specialty coffees in order to cover their needs.

A complex market

Apart from pure market economy mechanisms, crises can have a heavy impact on trade, whether in the very short term (disease on trees, loss of production following a climatic disaster, lack of labor to harvest cherries , migration crises, health crises, etc. as well as in the medium and long terms.

It is always a good idea to find out about the local market conditions and the harvests of each country in order to be able to judge the merits of the prices that we are offered. They dictate prices just as much as market mechanisms and batch quality.

For equal quality, batches from different countries or even different regions can have huge price differences… for completely explainable reasons. Knowledge means being aware of the challenges of each terroir and therefore supporting each of them to preserve the great diversity that makes our product so rich.

Ever higher costs

Whether at the origin, in transport, in processing… the costs are getting higher and higher. Oil, water, electricity, gas, rents, labor costs, packaging… You don’t just pay for grain but also all these things.

The current instability and inflation that we are experiencing cannot fail to affect our industry. You continue to support the food industry by going to the supermarket, know that specialty coffee working on small volumes, cannot ventilate these overloads as well as the large industrialists.

coffee plantations

What is “the right price”?

The right price is that of durability. The one that allows actors to lead a descent life and to carry out actions to sustain the activity while carrying out actions to protect the planet. I

There are far too few labels that guarantee you these things (the biggest ones do not), it is often wiser to find out about the traceability of the batch we buy to know the real impact of our choice.

Seasonality, quality, origin, additional costs (marketing being part of it, especially for large brands or the kings of Google AdWords) have an impact on the price of your coffee. Demand traceability on your batches and be curious consumers. Thus, the coffee industry can grow under the impulse of your virtuous demands.

For the year 2022 for example, a bag of 250g of natural Brazilian Catuai showing a cup score of approximately 83 costing more than 10 euros can be considered expensive but a Panamanian Geisha scoring more than 89 to 35 euros for the same capacity will be considered a good deal. In coffee as in wine, you have to go much further than the price/capacity ratio.

What prospects?

Coffee professionals do not foresee a drop in prices over the coming years and fear a reverse trend.

Personally, I have been predicting for years a brutal return for the consumer to the reality of our product…a reality ignored by the greatest number for 80 years: coffee is not a commodity product that can be consumed at will, it is an exotic product, for tasting.

People who have taken the turn of specialty coffee are already in this logic and have seen prices increase but less than industrial coffee, which is more subject to the storms of the mass market.

We have now achieved a fair remuneration for players and it is difficult to predict market fluctuations in the years to come. However, we can say that the drop in production, the increase in demand, inflation, global warming… will surely not push prices down.

The coffee trade does not escape the world around us… its uncertainties, its crises, its challenges. While we are experiencing a rarely seen price increase, it is up to us to ask ourselves the right questions today in order to preserve this drink that we love to taste and share.

The responsibility of the consumer is great and often dictates the policy and actions of professionals in the sector. It is more important than ever to embrace this increase as something positive and an opportunity to consume coffee differently.

Then what we do not consume wine only to get drunk, we must convey the idea that coffee is not a shot of caffeine but a tasting product, resulting from the work of a large value chain which must to be able to live from his work and have the necessary means to face the great challenges of our time and continue to treat ourselves.