Coffee prices

admin · July 2010

there was an article in this weekend's Australian about coffee prices going upwards [after years of being very low] - good news for farmers in developing countries, but interesting to know what effect it might have on retail coffee prices?

A

blanyon · July 2010

My thoughts are that consumers are very price sensitive at the moment and retail outlets need to be careful with their pricing, that said you need to manage your pricing to make a profit (nasty business this is).

askthecoffeeguy · July 2010

Melbourne coffee prices have been too low for too long - I have no problems paying more or charging more for great coffee - especially if that coffee is specialty and boutique roasted, and made by folks who care about what they do! And any price increase to the farmers can only be a good thing - they would need to be paid significantly more than what they're getting on average at the moment, before that price increase impacted upon what consumers pay for the final product

hazchem · July 2010

on 1280407079:

Melbourne coffee prices have been too low for too long - I have no problems paying more or charging more for great coffee - especially if that coffee is specialty and boutique roasted, and made by folks who care about what they do! And any price increase to the farmers can only be a good thing - they would need to be paid significantly more than what they're getting on average at the moment, before that price increase impacted upon what consumers pay for the final product

same here. I'm more than happy to may more for specialty coffee that is properly roasted and brewed with care. I've even tried to give some places more money on occasion as I know they must be taking bath on some coffees when they are sold at only $3. Never works though so I just put it in the tip jar. More money back to the farmer is key though and we all know the reasons why. But how to get the mass market to accept this and swallow a higher price at retail? The Fairtrade model, as flawed as it is, has at least gotten the message of a need for a higher price at the farm gate. But where to from here? Do retailers push the CoE auction message based on how the coffee has been judged? I fear that in the short to medium term, this is only going to appeal to a niche. For the mass market, I think that sustainability and social responsibility message is what will get traction first. This also means that other programs like UTZ, Rainforest Alliance etc aren't excluded from getting their messages to cut through. I think/hope that once this message cuts through, retailers will find it easier to expand on the ideas and educate customers further about freshness, exciting flavours and all the things we really love about specialty coffee. That's just my sense as a consumer though, I may well have the wrong end of the stick! ;D

admin · July 2010

Interesting update on this topic from Businessweek online: Coffee Rises to 12-Year High as Inventories Drop for 20th Month; - article text below: Inventories of arabica coffee in warehouses monitored by ICE Futures U.S. have dropped every month since November 2008, falling 54 percent. Based on price-chart analysis, futures may extend the rally to the highest level since August 1997, said Jim Stellakis, an independent analyst, and Robin Rosenberg, a futures and options strategist at PFG Best. Arabica-coffee futures for September delivery rose 3.25 cents, or 1.9 percent, to close at $1.763 a pound at 2 p.m. on ICE in New York. Earlier, the price reached $1.7875, the highest level for a most-active contract since Feb. 6, 1998. The commodity jumped 6.2 percent this week. In 2010, coffee has gained 30 percent, the most among 19 raw materials in the Reuters/Jefferies CRB Index and coffee futures may jump as much as 13 percent to $2 which would mark the highest level since Aug. 11, 1997. On the Liffe exchange in London, robusta-coffee futures for September delivery gained $63, or 3.6 percent, to close at $1,810 a metric ton at 5:30 p.m. local time. Stockpiles of robusta, grown mostly in Vietnam, were 211,930 tons as of July 26, down 39 percent from the end of 2009, according to figures from NYSE Liffe in London. (Bloomberg)

askthecoffeeguy · August 2010

heard on the grapevine today that one of australia's big two coffee importers is dropping out of the australian market for reasons that I wont mention here - leaving only one major importer for the whole of australia i.e. a closed market with massive demand! expect coffee prices across the board to get a whole lot higher sooner than expected!

admin · August 2010

boy, that's pretty big news ACG - which are the ones that are dropping out; which one will be left? A

Dry_bean. · August 2010

on 1281177105:

heard on the grapevine today that one of australia's big two coffee importers is dropping out of the australian market for reasons that I wont mention here - leaving only one major importer for the whole of australia i.e. a closed market with massive demand! expect coffee prices across the board to get a whole lot higher sooner than expected!

Ahhhh yes, but keep in mind that (Nature abhors a vacuum) if there is sufficient demand and the market will support more than one player expect the gap to be filled quickly by some enterprising outfit, monopolies seldom last long.

askthecoffeeguy · August 2010

According to my sources the same situation has happened twice before each time leading to an escalation of coffee prices...

Dry_bean. · August 2010

on 1281255379:

According to my sources the same situation has happened twice before each time leafing to acedpud escalation of coffee prices...

leafing to acedpud ??? ;D So if the same situation has happened twice before someone must have stepped in and taken up the slack.

askthecoffeeguy · August 2010

on 1281255886:

on 1281255379:

According to my sources the same situation has happened twice before each time leafing to acedpud escalation of coffee prices...

leafing to acedpud ??? ;D

yep... if those damn coffee prices keep escalating you wont find me sticking around... I'll be catching the next train to Acedpud! oh, yeah.... and I'll probably stop using my iphone to add content to forums as the damn autospell check has a mind of its own!

Dry_bean. · August 2010

Where the heck is Acepud? googled it with no result, are coffee prices more reasonable there? ;D

DoubleRistretto · August 2010

anywhere near Kandina -ha, ha? dR :D

Dry_bean. · August 2010

Back on topic, I have no problem paying a fair price for coffee if its worth drinking, I object strongly to paying $3.50 for a cup of swill that in my home cafe would be a sink shot, and sadly this is the case all too frequently, its pointless sending it back and complaining because you know they will replace it with another exactly the same, so all you can do is cross the joint off the list of places to frequent. ::)

DoubleRistretto · August 2010

you always get a change when there's a change of ownership, but not sure I agree that 'most' have dropped their quality; how can you justify that? not sure which state you're in, but things in Melbourne seem to me to be better quality-wise [in general] than for a long time - there are just so many cafes doing great coffee at the moment. dR

Dry_bean. · August 2010

on 1281750591:

you always get a change when there's a change of ownership, but not sure I agree that 'most' have dropped their quality; how can you justify that? not sure which state you're in, but things in Melbourne seem to me to be better quality-wise [in general] than for a long time - there are just so many cafes doing great coffee at the moment. dR

In SA its not so much that most have dropped quality its more a case of the quality was never there to begin with. Adelaide literally has hundreds of coffee establishments, of these I reckon you might get a decent cup at 10% and an exceptional one at 5%, of course I have nothing to back the figures up, just a general feeling from my observations as a consumer.

askthecoffeeguy · August 2010

I also strenuously object to paying extra for soy or 'an extra shot' especially when the coffee is crap to start off with !

admin · August 2010

Interesting AM ... actually I remember having a similar rant about 3-4 years ago about coffee quality generally and so overall I have to agree, although I'm hoping that the rise of so many good new places [especially recently in Melbourne] like Seven Seeds, Proud mary, Market Lane and of course Auction Rooms, will lift the standard overall. The question is, is it working and is the increasing profile of some of these great cafes causing people generally to demand better coffee??? A PS Db - have to say I agree, not sure if you realise, but we recently relocated from Sydney to Adelaide, and I couldn't believe the average standard of coffee here!!

Dry_bean. · August 2010

on 1281836619:

PS Db - have to say I agree, not sure if you realise, but we recently relocated from Sydney to Adelaide, and I couldn't believe the average standard of coffee here!!

Was not aware of your relocation, trust your settling in ok. Its not an easy thing to get a decent coffee in SA, even some of the so called boutique eatablishments can be pretty ordinary.

admin · August 2010

actually, I guess it was more surprise than anything on my part ... because SA has such a great reputation for food & wine, I suspected it would be the same for coffee, but unfortunately not. Except for Ian's C. Bar 9, and a couple of other exceptions, have been sorely disappointed [although i fear this is moving rapidly off topic!!] A :o

admin · August 2010

just to get back on topic, have picked up a report on trends in the markets... it's written in fairly formal language, but I think it gives a good summation: "Coffee prices have started to rise in the international markets and reached the highest level of the last 12 years due to the expectation that the storms proceeding towards the largest coffee producers of the world willl have an adverse effect on supply. The fact that Vietnam and Mexico, the largest countries in terms of coffee, are situated on the route of the storms causes concerns in the markets. Particularly, due to the formation of a concern as to the fact that production shall further fall back in a period when the coffee bean stocks are increasingly reduced, the price of the Arabica type coffee for delivery in December increased by 3.6 cents, i.e. 2 percent and reached 188.65 US$/pound (1 pound = 453 grams), its highest level since December 1997, the previous day. And the price of the Robusta type coffee for delivery in November increased in the NYSE Liffe in London by 47 US dollars, i.e. 2.6 percent and reached 1.838 US$/ton. cheers A

askthecoffeeguy · August 2010

Yes true but as the demand for speciality coffee increases so too do prices increase - and improved farming methods combined with increased quality control checks continue to add value, which, in theory at least means that there is a vested interest in improved quality adding higher value to raw materials generating higher returns

DoubleRistretto · September 2010

recent piece on this from The Age in Melb. http://m.theage.com.au/victoria/bean-crush-means-coffee-will-cost-a-latte-more-20100904-14vd9.html

askthecoffeeguy · September 2010

I have no problems with price increases in terms of what cafe's charge as long as this adds up to a great cup of coffee and I'd much rather pay $4 for a coffee that I really enjoy than $2.5 for one that is crap - but once you start charging $4 and up for a cup of Joe - if the results are not there I think the customer has a right to fell a bit miffed (I was going to use stronger words but lets keep it nice folks)

DoubleRistretto · September 2010

Am a subsciber to brisbane based Gilkatho's newletters. They did a comparison of coffee prices recently: Brisbanites pay more for a takeaway coffee than fellow caffeine lovers in Melbourne and Sydney. While Sydneysiders enjoy the cheapest coffee prices of the three capital cities, according to an annual survey by Brisbane-based coffee supply company Gilkatho. More than 600 cafes across Melbourne, Brisbane and Sydney were surveyed. Wayne Fowler said they found coffee prices had gone up by an average of three per cent across all three cities. He said this was less of a jump compared to 5.4 per cent in 2009. But compared to the 1.4 per cent increase in other foods and beverages, Mr Fowler says it appears people are willing to pay more for a cup of coffee. A regular takeaway cappuccino is $3.06 cents in Sydney - 25 cents cheaper than in Brisbane ($3.31) and 16 cents less than in Melbourne ($3.22).

Dry_bean. · September 2010

on 1285794687:

Am a subsciber to brisbane based Gilkatho's newletters. They did a comparison of coffee prices recently: Brisbanites pay more for a takeaway coffee than fellow caffeine lovers in Melbourne and Sydney. While Sydneysiders enjoy the cheapest coffee prices of the three capital cities, according to an annual survey by Brisbane-based coffee supply company Gilkatho. More than 600 cafes across Melbourne, Brisbane and Sydney were surveyed. Wayne Fowler said they found coffee prices had gone up by an average of three per cent across all three cities. He said this was less of a jump compared to 5.4 per cent in 2009. But compared to the 1.4 per cent increase in other foods and beverages, Mr Fowler says it appears people are willing to pay more for a cup of coffee. A regular takeaway cappuccino is $3.06 cents in Sydney - 25 cents cheaper than in Brisbane ($3.31) and 16 cents less than in Melbourne ($3.22).

This was in the SMH a few days back. http://www.smh.com.au/lifestyle/lifematters/who-pays-the-most-for-coffee-20100928-15vh6.html

admin · October 2010

a really interesting perspective on the recent higher prices of green beans, from David Pohl from Equator Coffee in the US: a bit long, so will post in two parts: Part 1: "Coffee pundits are fretting about a coffee "shortage", which has led to a 35% price spike over the past four months on the NY ICE Coffee Futures Exchange. We're hearing dire predictions of doom and gloom, an "end to coffee as we know it." Leave it to mainstream media and hedge funds to create a mountain out of a molehill. Yet as a green coffee buyer who scours the world over for the best boutique coffee, works with trusted importers and growers to bring it to my doorstep, roasts it with artisan sensibility and packages it for the retail and wholesale coffee market, I am inundated with high quality coffee -- more than I know what to do with. The truth is that while there are legitimate concerns about supply, from where I sit the future of coffee has never looked so good. My reason for optimism is simple: we are in a renaissance that is transforming coffee from a cheap commodity to a much more sophisticated beverage. I work for Equator Coffees & Teas in San Rafael CA, and I seek the best, most exotic coffees in the world. I evaluate coffees from Africa, Asia and Latin America every day, and travel to coffee farms several times a year. What I find absolutely striking is that throughout the industry quality is up, even if supply isn't. So, is the shortage such a bad thing? Back in 2002 when I started in the industry, green coffee prices were at historic lows. The market price was $.40/pound, while the minimum cost of production was twice that. Farmers were going broke daily, abandoning their farms in search of work in the cities or abroad. It was devastating. Flash forward to 2010: green coffee prices are up around $1.90 and everyone is alarmed - except for the farmers who understandably love the price. There are a number of reasons for the price spike: smaller than expected harvests in Brazil, Colombia and Vietnam; farms that went broke during the crisis earlier in the century are still not at peak production (it takes 3-5 years for a coffee plant to produce); increases in global demand are outstripping increases in supply; and a weak global economy means that hedge funds are pouring money into commodities like coffee hoping for short-term returns. I don't feel comfortable with the bubble risk posed by institutional investors, but all of the other reasons for the increase are legitimate and stem from the fact that people are drinking more coffee -- arguably a good thing.

admin · October 2010

Part 2 of David's post: What I really find encouraging about the trend that has emerged in the wake of the coffee price meltdown eight years ago, especially as we head into another "crisis", is that consumers are willing to pay more for quality and sustainability. And farmers, keen to avoid another meltdown, have learned that they are better off producing higher quality coffee in a sustainable manner, not just more coffee. 20 years ago practically the only measure of a farm's success was its yield -- now quality is the number one issue. Today coffee growers are approaching their work, and are viewed by consumers, as artisans rather than struggling farmers at the bottom of the food chain. They are taking control of the situation and delivering coffee consumers are willing to pay a premium for. More farmers are focusing on the quality of their harvests, refining their growing techniques, installing hi-tech, efficient processing equipment and doing more to promote themselves by entering their coffees in competitions and reaching out to roasters via social media (most recently, a Salvadoran grower has communicated with us on Facebook). This positive development stands at odds with the "crisis" we are told is destroying the coffee industry. Consider what has happened to coffee in Panama over the last few years. It has gone from an undervalued origin to one of the most prized. I spend a couple of months each year on Equator's own coffee farm, Finca Sofia. Since starting the farm from scratch three years ago we have planted 25,000 "Geisha" variety coffee trees, which we tend with the attention of a new mother. Geisha, an heirloom variety from Africa, took the world by storm a few years ago, sweeping every tasting competition it entered. Coffee judges could not believe it was grown in Panama - known primarily for clean, mild coffees, not wild, exotic ones. They were convinced it was from the crown-jewel of the coffee world, Ethiopia. Since then, green, unroasted Geisha grown in Panama has been selling at astronomical prices ranging from $25-170/pound. By first shattering taste expectations, this coffee went on to shatter price expectations. This had a trickle-down effect -- the best coffees from many other origins now sell for prices exponentially higher than the commodity price. Rarely do coffees sell for over $100, but it is quite common to see coffees from El Salvador, Guatemala, Ethiopia, Colombia and Peru sell for $10-40. This is the exciting future of the coffee industry as I see it. So while the coming "shortage" will quite possibly have an impact on the world of coffee, and consumers will have to pay more for their coffee, they will also likely be treated to better quality coffee. Farmers will be rewarded for investments in quality and sustainability. If this is the "end of coffee as we know it", good riddance. The renaissance already underway suggests that the best is yet to come. In future posts I will reflect upon the changing world of coffee.

DoubleRistretto · October 2010

Interesting article on coffee prices in different cities in today's Australian - tries to explain why coffee is $4.50 in some places in Perth, but around $3.00 in Sydney & Melbourne. dR

admin · October 2010

thanks dR - this is the article [not sure if using Pellegrini's is any sign of good research] but interesting anyway: http://www.theaustralian.com.au/national-affairs/the-bean-counters-guide/story-fn59niix-1225935799814

admin · October 2010

don't know how relevant this is, but a little snippet from the US newswires [below]; would b einterested to see what Aust. roasters have to say on this subject at present... Coffee prices go up and more items are expected to follow Posted: 10/22/2010 TAMPA, Fla. - Coffee roaster Dave Ward says he's never seen prices rise so high so fast. He's paying 50% higher, or about a dollar more for a single pound of beans than he was just a few months ago.

Howdy, Stranger!

Howdy, Stranger!

Categories

In this Discussion

Coffee prices

Comments

frame

Howdy, Stranger!

Howdy, Stranger!

Quick Links

Categories

In this Discussion

Coffee prices

Comments

foot

Policies

Social