In the world of coffee (New York stock exchange) we are experiencing unprecedented continuous price increases, this started about 6 months ago and continues to rise. In reality the price of coffee has increased yearly over the last 10 years but we have always opted to absorb such increases. Unlike many other companies we have decide to continue to supply only the best premium quality coffees but this comes at a cost. In order to show our appreciation for your continued support, we have decided to absorb 60% of the latest price increases.
This is just to let you all know that prices are going up, this is not exclusive to coffee but it’s a phenomenon taking place around the globe in all fields. When talking to friends and family working in other areas you will hear the same story about prices going up.
A brief explanation:
All coffee machines are made out of steel, metal, plastic and electronic components, all of this elements have gone up in price due to more demand than supply, the fuel that is needed to transport such elements has also gone up, manufacturers are also facing new “green” taxes (we all want a pollution free world), demand for electronic components has gone crazy due to a growing demand for electronic cars, we all want to earn more so wages go up, etc.
Severe frost in Brazil (largest producer of arabica coffee in the world), crop disease in Colombia and Central America, war in Africa, increase in demand (everybody wants an iPhone in one hand and a coffee in the other), speculators, etc.
Brazil produces 40 million sacks (each sack is 60kg of green coffee) of arabica coffee per year, frost has destroyed at least 5 million sacks thereby increasing the price of the remainder coffee (everybody in the world uses Brazilian coffee in their blends). Just for info, Brazil also produces 15 million sacks of Robusta coffee per year.
Once a plant is damaged it needs to be replaced and it takes between 3 to 5 years (depending on the region, part of the world) for a sapling to produce coffee. This means that prices will not come down anytime soon.
Not if you stick to quality. Some companies will change their blends by adding/increasing Robusta in the mix but this will create another problem, add too much Robusta and the taste will go towards rubber, leather, musty, cardboard, smoke, ash, i.e. not pleasant, on top of this Robusta is high on caffeine (unpleasant feeling) and it can cause indigestion (even more unpleasant feeling).
It is also a known fact that Robusta growers (Vietnam is the largest in the world) are keeping an eye on how much is the price of Arabica increasing and it is only a matter of time before they create a shortage of supply to increase their prices (same as in the world of petrol). Buyers (Stock Exchange) are also stocking on green coffee, this is called arbitrage and it consists on buying coffee at a low price in the now in order to create a shortage leading to a price increase in the future, it sounds illegal, but it is encouraged in the world of finances (the rich getting richer and the poor.. poorer, welcome to the human race).
Our new prices will come into place from the beginning of January but it is important for you to notice that many companies have already increased their prices to reflect the radical changes taking place, as an example Lavazza opted to increase their prices in 3 stages (3%, 8%, 8%) while Douwe Egberts went for a straight 22% increase and have announced further increases throughout 2022.