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High coffee prices could hurt coffee shops in Europe

2022-09-01 18:40:01Biznes SHKRUAR NGA REDAKSIA VOX
High coffee prices could hurt coffee shops in Europe
Cafe in Paris

Consumers, cafes and restaurants in Europe are facing an increase in coffee prices. Experts suggest that the situation will not change for the better in the near future, and it may even worsen.

Over the past few months, coffee prices have risen across Europe.

Although many cafes in Berlin have not raised prices so far, they have not ruled out the possibility of doing so. Most of the cafes in the German capital have seen their profits decrease in recent times.

Major climate change and increased demand, along with geopolitical developments and logistical problems caused by the pandemic, have driven higher wholesale prices over the past two years. High energy prices and a 100% increase in transport costs over the past 12 months have added to inflationary pressures.

"Coffee was trading at $0.85 per pound in May 2019, the lowest level since 2004. By the end of the year, the price had risen to $1.25," said Jordan Montgomery, marketing manager at Fjord Coffee Roasters. Berlin. “Hard frosts in Brazil, which is the world's leading producer, occurred in July 2021. Two difficult nights caused prices to reach $2.50. They went to $2.60 in July 2022, before falling to $2.16 in August.”

Prices for Arabica coffee futures and sales are set by the Intercontinental Exchange (ICE) in New York. The price set by ICE, known as the 'C Price', determines the global average prices for Arabica coffee

Cafes in Europe

Since the price of coffee is measured in dollars, the weakening of the euro and yen could hurt consumption in Europe and Japan, a trader from London told DW.

Businesses in Germany also complain about additional taxes, staff shortages and rising insurance costs.

“These factors forced us to pass on some of our costs to customers and caused us to have lower profits on some products. Average growth over the past 12 months has been about 6%,” Montgomery said.

He added that coffee roasters had been able to afford the high prices so far, especially during the pandemic, by passing the cost on to consumers who order online. But for cafes it is not like that. They remain the most affected, also due to higher staffing and rental costs. In October, the minimum wage in Germany will reach 12 euros ($11.90) per hour.

A fair price?

Some experts suggest that a cup of coffee in a coffee shop in Europe should cost 5-6 euros, especially in Germany, where a 17th-century tax on roasted coffee is still in force. "From a kilogram of roasted coffee that is sold on the German market, 2.19 euros go to the state," said Montgomery. Belgium, Denmark, Greece, Lithuania and Norway are the only European countries that apply a tax similar to Germany.

Nicole Battefeld, the German coffee champion and a competitor at the World Coffee Championship in September, said coffee should also be more expensive in supermarkets – at least 20 euros per kilo.

"In Germany, often, the price per kilo is no more than 8 euros - we are simply removing the investment cost from the farmers. This resembles another form of colonialism. We never fully realized how much work is needed for this.”

Battefeld said coffee traded at a fair price, with contracts offering $1.36 a pound to farmers, is only a partial solution.

"This fair price helps maintain living conditions, but often takes away the opportunity to invest in farms and modernize them," she said. "This helps farmers when their produce is not of a very high quality, but in cases where the produce is really of a high quality, these contracts limit farmers, as they cannot set higher prices." / DW


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