UK Consumers Face Soaring Coffee Prices Exacerbated by Extreme Weather Events and Global Conflicts – CoffeeTalk

Drinkers in the UK are facing rising coffee prices, with some cafés charging up to £6.50 for a flat white. This inflation is attributed to several factors: increased energy bills driven by the Middle East conflict, heightened taxation and wage policies, and adverse weather conditions affecting coffee production. A forecasted “super El Niño” phenomenon could exacerbate extreme rainfall and drought, impacting harvests particularly in Brazil, where rain levels were reported to be 2,000% above historical norms, leading to delays in harvests by 52% due to waterlogged fields and poor bean quality.

In Vietnam, robusta bean producers are grappling with early drought conditions alongside a 30% rise in fertilizer and fuel costs year-on-year, with labor costs up 33%. The Italian coffee company Lavazza has noted “exceptional volatility” in the market, reporting a 230% increase in arabica bean prices and a 325% rise in robusta since 2021. Consequently, Lavazza has raised flat white prices from £4 to £4.40 for takeaway and from £5.50 to £6.50 for in-store consumption, reflecting the need to pass rising costs onto consumers.

Other chains, like Starbucks and Costa, have also increased prices, pricing flat whites at £5.20 and £4.70 respectively. Wealth Club’s chief investment strategist, Susannah Streeter, emphasizes the persistent volatility and elevated operating costs are pushing companies to account for a price buffer to maintain profit margins.

While Lavazza’s sales remain strong despite price hikes, consumer tolerance for continued increases may have limits, especially affecting casual walk-in trade. Grind’s founder, David Abrahamovitch, mentions he keeps flat white prices low despite minimal profits, highlighting the broader market’s challenges where production and operating costs remain elevated.

The British Coffee Association, represented by executive director Paul Rooke, notes that recent years have seen significant global coffee market volatility—an issue expected to continue, influenced by domestic factors such as rising energy and labor costs. Despite these challenges, coffee demand remains robust, particularly in the ready-to-drink segment, showing ongoing innovation in the sector.

Read More @ The Guardian