New Zealand Coffee Industry About To Experience Severe Sticker Shock – CoffeeTalk
New Zealand’s coffee and café industry is facing a “very scary” situation as coffee commodity prices hit levels not seen since the late 1970s. Richard Corney, managing director of Flight Coffee, which also operates Wellington café The Hangar, warns that the sector is in “uncharted territory” as coffee commodity prices hit levels not seen since the late 1970s. He points to the New York City price, which has been lifting year on year over the past five years and now looks to have broken its December record. A weaker New Zealand dollar did not help, either.
With both the Arabica and Robusta markets trading at extended unprecedented historic levels, all coffee, both fresh, instant, high quality, and low, is going to get much more expensive. The impact these market dynamics are having on coffee roasters, not just in New Zealand but the world over, mean significant price increases for consumers are inevitable. The average green coffee price, excluding all other input costs, had lifted from $3.76 a kilogram in 2020 to $10.18 a kilogram in 2024 and was at $13.97 so far in January.
Richard Corney said the margin challenges facing coffee roasters over the past three years are painfully obvious. As coffee contracts booked throughout the 2024 period materialize, coffee roasters are facing between a 25 percent to 35 percent reduction in margin, possibly more depending on the period you’re comparing this against. Roasters would have to pass on the cost to cafés, and it would be up to cafés how much of that they could absorb.
Marisa Bidois, chief executive of the Restaurant Association, said the rising cost of coffee is yet another pressure point for hospitality businesses already facing rising costs. For many cafés, coffee is a cornerstone of their offering, and price hikes on beans add to the squeeze on already tight margins.
Global supply chain disruptions, climate conditions affecting production, and currency fluctuations are driving up costs, and businesses across the sector are contending with increased supplier costs across the board. To remain sustainable, cafés will need to review their pricing accordingly, ensuring they can continue to provide quality coffee while covering their costs.
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Source: Coffee Talk