Coffee harvest in Colombia: In
view of the low consumer prices, many farmers are constantly in need of existence
Photo: JOSE MIGUEL GOMEZ / REUTERS
Bad news for coffee drinkers: The prices of the caffeinated hot beverage have already risen sharply in recent months - and according to experts, it should continue to rise in the future. One reason for this is on the supply side: With climate change, there is an increasing threat of crop failures in many countries. Another reason is the increasing demand: coffee consumption is increasing worldwide, especially in emerging countries. From both it follows according to the laws of the market: The price level in the coffee business is likely to continue to rise.
This continues a trend that began many months ago. Since its interim low point a good two years ago, the coffee market has been on an upward trend - as manager magazin announced at the time. According to the International Coffee Organization (ICO), prices have already risen by more than 50 percent in the current year alone. A pound of Arabica coffee is now traded for more than two US dollars on the commodities exchange in New York. Two years ago the price was just over $ 1.20 per pound.
There are various reasons for the recent rise in coffee prices: In Brazil, by far the world's largest producer and exporter of coffee, extreme weather fluctuations adversely affected crop yields. At first the coffee farmers suffered from a period of drought, followed by unexpected frost and snowfall. In Vietnam, which has established itself in second place in the global producer ranking in recent years, it is above all the corona crisis that is burdening business. The delta variant of the corona virus is spreading rapidly in Southeast Asia and repeatedly causing lockdowns and other restrictions.
In Colombia, the third largest supplier of coffee on the world market, political unrest is disrupting the bean business. And as if that weren't enough, global shipping and other parts of retail logistics have been in a capacity crisis for months, in which freight costs have skyrocketed - this increase is also driving coffee prices up.
This is also popular with German consumers. The coffee giant Tchibo, market leader and pacesetter for the industry in this country, raised its prices in the summer of this year - for the first time in four years, during which prices had repeatedly fallen. Depending on the variety and country of origin, Tchibo screwed up its prices in June by 50 cents to one euro per pound, which in percentage terms meant a considerable jump. One pound of the popular "Feine Milde" filter coffee was now available for an impressive 5.69 euros, according to Tchibo. Other providers did the same for the industry size from Hamburg.
It is hard to imagine that Germans would allow themselves to be taken away from coffee as a result.
Already the restrictions of the Corona crisis, during which the gastronomy had to be closed for a long time, did not let the coffee consumption in this country decrease.
On the contrary: According to the German Coffee Association, consumption rose by 11 percent on balance in 2020.
According to the association, customers were able to drink less coffee in restaurants and cafes.
On the other hand, consumption increased in your own four walls.
Climate change drives coffee prices
Market participants such as Tchibo or the supermarket chains Rewe and Edeka did not want to comment on their expectations with regard to further price developments. However, there are some indications that coffee lovers will have to be prepared for further increases in prices in the future. "Coffee has become more expensive recently, but basically it is still too cheap," says Steffen Schwarz, head of the Coffee Consulate training and research center in Mannheim and an experienced connoisseur of the profession. He is certain: "Coffee prices will continue to rise dramatically."
Schwarz cites the above-mentioned consequences of climate change as the main reason.
In India, one of the ten largest supplier countries, he says, crop losses of 30 to 70 percent have been regularly reported for several years due to changed weather conditions.
The freak weather that was recently observed in Brazil also fits into this context.
Enlarge image
"Coffee is too cheap":
Expert
Steffen Schwarz
expects prices to continue to rise
Photo: Luca Siermann / Coffee Consulate
On the other hand, according to Schwarz, the global demand for coffee is increasing continuously. In emerging countries in particular, coffee consumption increases with prosperity. The USA is often named in statistics as the largest consumer of coffee in the world. In fact, the secret number one has long been Brazil, so Schwarz. "The Brazilians are the largest coffee producer and have long been drinking half of their production themselves," he says.
For the expert there is therefore only one logical consequence: the price of coffee will continue to rise.
However, Schwarz also emphasizes that the price has been far too low for years anyway.
The majority of coffee farmers in countries such as Brazil, Vietnam, Colombia and India could not cover their costs even with the price level that has now been reached again.
"It only works because many family members lend a hand without wages, and because many of these companies are not even able to set up a correct cost calculation."
If the farmers only got 30 cents more per kilo of coffee, that would solve many problems, says Schwarz.
But the world market has not yet given this 30 cents plus - not even after the price increase in recent months.
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