The Cost of Coffee - What’s Behind the Rise in Coffee Prices?

Contents

  1. Factors Influencing The Cost Of Coffee

  2. The Climate Crisis

  3. Disruptions To Global Supply Chains

  4. Packaging Costs

  5. Consumer Demands

  6. Lorry Driver Shortages

  7. Barista And Shop Staff Shortages

  8. The Cost Of Quality

  9. How Are Coffee Shops Dealing With The Higher Cost Of Green Coffee Beans?

  10. Advice For Consumers

 

Whether we like it or not, coffee is getting more expensive. And beyond the initial frustration felt when the cost of an everyday pleasure like coffee rises, it’s important to look at some of the reasons why this is happening, before you potentially do one of the following:

  • Buy less sustainable and ethical coffee because it’s cheaper 

  • Lay blame on the wrong people for higher prices 

In truth, something so seemingly simple as the cost of a cup or bag of coffee is connected to so many of the world’s most critical issues, ranging from the climate crisis to the global pandemic.

While acknowledging some of these broader elements at play won’t necessarily make your favourite bag of specialty coffee cheaper, it could help you understand why things are the way they are, and if there’s anything you can do about it. 

Something so seemingly simple as the cost of a cup or bag of coffee is connected to so many of the world’s most critical issues, ranging from the climate crisis to the global pandemic.

Factors Influencing the Cost of Coffee

The Climate Crisis

Unpredictable weather patterns and changing temperatures in coffee producing countries, as a result of climate change, have ruined many coffee harvests and reduced the total area suitable for coffee production in many places. And when coffee production goes down in one place, or universally, this naturally has an impact on price. 

Disruptions to Global Shipping 

International shipping has become much more complicated, partly due to the effects of Covid-19 but also the huge increase in demand for global freight shipping. All of this is causing costly delays and an increase in the cost of shipping coffee from far away places like Colombia or Indonesia to Europe. 

Consumer Demand 

More people are drinking coffee than ever before, which is pushing up the price of coffee as supply struggles to keep up with demand. 

Packaging Costs

While the need to use more environmentally-friendly packaging for coffee cups and bags is real, so too is the cost for shops switching to compostable or recyclable materials. We’ve also witnessed fluctuating shortages of packaging stock forcing some companies to find more costly short-term solutions to packaging, which comes at a higher cost. 

Lorry Driver Shortages 

A shortage of drivers needed to transport coffee from ports to roasteries has significantly affected the coffee supply chain – a problem that has been exacerbated in the UK due to Brexit. 

Barista and Shop Staff Shortages 

There have been shortages of staff across the UK hospitality sector due to many EU workers leaving during the pandemic and Brexit.

The Cost of Quality 

Producing coffee of higher quality simply costs more. Coffee must be cared for more diligently and harvesting and processing it properly requires much more human labour if you want to achieve the highest quality standards.

The Climate Crisis

Rising temperatures, drought and more extreme weather (frost, heatwaves etc.) are having an impact on coffee production. This is touching the lives of many farmers in coffee producing countries, including those in Colombia that we source from, and, is now touching the lives of coffee drinkers around the world who are seeing prices go up as a result. 

Recently, the largest global coffee producer, Brazil, experienced a cold snap that wiped out a third of the nation’s total crop(!). While farmers are now much more aware of and prepared for how extreme weather can impact their operations, the severity and suddenness of this came as a shock to Brazilian producers, driving up the price of green coffee beans.

Whether it’s Colombia, Brazil, Sumatra (Indonesia) or Kenya, weather conditions have become much more unpredictable than they used to be.

5 Ways Climate Change Makes It Harder to Grow Specialty Coffee

  • Higher temperatures damage beans 

  • Droughts reduce yields (how much coffee is produced and harvested)

  • There is a higher risk of pests damaging crops in warmer weather

  • Water (vital to coffee production) becomes more scarce 

  • The quality of soil is impacted 

Disruptions to Global Supply Chains

Cross border shipping of large quantities of goods like coffee relies on complex global supply chains. And it doesn’t take much for these intricate networks to be disrupted.

The chaos caused by Covid-19, where the effects of unpredicted demand for certain products and restrictions for travel and production, no doubt caused major problems for producers, retailers and shipping companies (still being felt today). 

Sometimes retailers are able to shoulder these costs in the short term, but many small companies (including small coffee shops and roasters with much smaller stocks of green coffee) are not able to do this for very long. 

Also, local shortages of lorry drivers have added a strain on transportation processes that were once relatively smooth. 

Today, the rise in transport costs, limited shipping containers, logjams, and worker shortages mean it’s more expensive to import products to the UK. Sometimes retailers are able to shoulder these costs in the short term, but many small companies (including small coffee shops and roasters with limited stocks of green coffee) are not able to do this for very long. 

 

The Coffee Supply Chain - How Does It Work?

Packaging Costs

Hermanos takeaway coffee cup illustrating rise in cost of coffee

Takeaway cups are an important part of the coffee industry. And we are all increasingly aware of the damage they are doing to the planet. Biodegradable or recyclable paper cup options have steadily become the more popular choice among coffee shops, but this switch is costly and hard to handle for many small independents.

In an ideal world, consumers will switch largely to reusable cups (allowing retailers to cut out the cost of cups altogether), but until then, consumers will likely be asked to share the burden of this higher price (which coffee shops hope they will be willing to do if they know it’s for a good cause).

Consumer Demand

Consumer demand for coffee is still incredibly high, despite the rising cost of coffee. But will this always be the case? Based on historical data, some argue that regardless of how much coffee costs, people will still buy it. However, this is probably more true for individuals and families with higher incomes. 

A more realistic prediction is that most people will continue to buy coffee in similar quantities, but will look for other ways to cut costs. This could mean switching brands, buying lower quality coffee, buying more house blends capped at lower prices (rather than more expensive single origins), or purchasing more coffee to make at home.

Read Our Beginner’s Guide to Buying Specialty Coffee 

 Lorry Driver Shortages

Covid-19, and to a lesser but still significant extent, Brexit, have contributed to a shortage of delivery drivers in the UK. During the start of the pandemic, many EU drivers returned to their home countries before lockdown, as travel became more restricted and many also left the UK because of Brexit.

Due to both of these factors (whether directly or indirectly), there has been a limited number of drivers returning to the UK to bolster the dwindling numbers of hauliers needed to transport goods through the country. 

Barista and Shop Staff Shortages

Similar to the above, Covid-19 and Brexit has contributed to barista and hospitality staff shortages in the UK. No doubt lockdown, closing venues and the nature of the trade have made it difficult for many individuals to stay afloat over the last few years and many EU baristas have not returned since leaving, even as customers have come back to coffee shops, restaurants and hotels in large numbers. 

The Cost of Quality

Colombian coffee farmers picking coffee beans contributing to the cost of coffee

Producing coffee of higher quality simply costs more. Specialty coffee must be cared for more diligently and harvesting and processing it requires more human labour — sorting the very best beans into separate batches for higher quality standards to be met. 

While many coffee roasters and retailers are not prepared to pay high prices to farmers for better quality, thankfully, there are many that are. And in line with what many call the third wave of coffee, consumers are supporting this move by buying coffee from places that show they are invested in the communities and livelihoods of coffee producers. 

Many consumers and roasters in the specialty coffee sector are willing to buy coffee at a premium price for the sake of the planet and farmer welfare, but their resolve will be tested as prices continue to climb. Will consumers look for cheaper (slightly less ethical and sustainable) coffee to keep their spending down as the cost of living increases? Will roasters start blending more of their higher-grade coffees with lower grade lots to even out the cost?

Many consumers and roasters in the specialty coffee sector are willing to buy coffee at a premium price for the sake of the planet and farmer welfare.

How Are Coffee Shops Dealing with the Higher Cost of Green Coffee Beans?

The world of specialty coffee is highly competitive. Whether it’s for flat whites and lattes at coffee shops or retail bags of whole bean or ground coffee that can be used at home, prices are likely to climb only incrementally as many brands are conscious that if their products become too expensive, shoppers will look to competing brands. This fear means many coffee brands aren’t in a hurry to drive their prices up (good news for the average coffee drinker).

Nevertheless, as the cost of raw materials increases and profit margins drop, it’s only a matter of time before shops and retailers need to make a change. If things continue, brands are faced with the following dilemma:

  1. Introduce cheaper coffees into their ranges, such as commodity-grade Robustas or lower-scoring Arabica coffees to keep overall costs the same, retaining price competitiveness.

  2. Keep quality high but increase the cost to the consumer, relying on their audience's commitment to sustainability, welfare and quality.

Our Approach

While some roasters are able to make strategic substitutions with their coffees, both with the origins they stock (finding deals or lower prices in certain producing countries) and the way blends are made up of different concentrations of high, medium and low-quality coffee, we’re not able to do the same. 

The biggest reason for this is our commitment to sourcing the very best single origins from deserving farmers in Colombia. With so much care and attention paid to coffee production on each and every unique farm, we find it hard to either blend this with lower quality coffees, or high-quality coffees from other nations or even different regions of Colombia. 

We’ve always loved the single origin model for coffee sourcing and it’s how we’ve formed all of our direct relationships with producers (as well as defined who we are as a brand).

As such, we have been unable to adapt the nature of our product lineup substantially and are forced to pass on some of the burden of rising coffee costs to our customers, who, we hope, understand why we need to do this and hold similar values as a priority. 

With that said, we have and will continue to absorb the majority of the increase ourselves to acknowledge the loyalty of our customers and thank them for buying sustainable, ethical and truly fantastic coffee, even though it costs more. 

Single Origins vs. Blends — What’s the Difference? 

 Advice for Consumers

Woman holding a bag of Hermanos colombian coffee considering the cost of coffee

With living costs rising for everyone, the increased cost of coffee is no doubt an unwelcome reality. And cutting costs on non-essentials is often necessary. However, buying coffee responsibly (ensuring sourcing is sustainable and ethical) is still such an important way to make a positive impact on the world.

In light of all this, a few options worth considering are below: 

  1. Buy less coffee but make sure the coffee you do buy is good stuff (both in terms of what it represents for farmers and the environment, but also taste)

  2. Brew more coffee at home. Buying coffee in larger quantities so you can brew it at home is no doubt much cheaper than getting a takeaway coffee several times a day

  3. Search for deals. Many roasters like us will offer subscriptions and seasonal deals on coffees, which can help you guarantee quality at a lower cost

  4. Track your coffee spend and consider how it relates to other expenditures in your life

  5. Investigate where rising costs are coming from for specific brands you shop from. Some will leverage their branding more to justify their costs more than others

 

Explore Our Range of Colombian Single Origins

 


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