Consumers can expect coffee prices to remain high for at least another year, according to a leading coffee supplier. Lavazza, a major player in the industry, predicts that prices will not begin to decrease until mid-next year due to ongoing severe challenges affecting the market.
Giuseppe Lavazza, the vice chairman of the Italian coffee powerhouse, acknowledged his previous forecast was incorrect, having initially expected prices to decline this year. Instead, adverse conditions such as poor crop yields in key producers like Brazil and Vietnam, geopolitical tensions, and disruptions in supply chains have pushed coffee prices to their highest in 15 years. This Monday, the price per tonne hit a new record of 4,300 US dollars.
Additionally, logistical issues like blockages in the Suez Canal have quadrupled shipping costs. For consumers in the UK, this has translated into a 15% increase in the price of a 1kg bag of coffee beans over the past year, with an anticipated rise of 20% to 25% in the next year.
At Lavazza’s premier cafe near Regent Street in London, the price of a flat white is now £3.50 for takeaway and £5.50 for dine-in, indicative of the escalating costs.
Despite these headwinds, the popularity of brewing fresh coffee at home continues to grow in the UK. This trend started during the pandemic shutdowns and has persisted robustly. According to Giuseppe Lavazza, the appeal is not just about the coffee but also a shift towards more environmentally friendly practices, as consumers opt for beans over pods.
The UK’s retail coffee market is currently valued at £1.3 billion, with a growth of 3.9% annually, primarily driven by the increase in prices. Nielsen reports a 3.8% inflation in coffee prices, while Lavazza’s sales volumes increased by 2.9% in 2023, equating to 32 million more cups of coffee compared to two years prior.
Critics have pointed out that retailers may be profiteering, as there is evidence they are slow to pass on reductions in wholesale costs to consumers.
