Monday, May 31, 2021
Bad harvest forecasts
Germany is threatened with more expensive coffee
The favorite drink of Germans is coffee. Sales of the hot beverage are booming even during the pandemic. Problems on the international market mean that consumers will have to dig deeper into their pockets in the future.
Consumers in Germany have to spend a little more for their favorite drink – after years of stable or even falling prices. Above all, the poor harvest forecasts for the world’s largest coffee producer, Brazil, are responsible. They have been driving up purchase prices for green coffee for months, for example the price of Arabica beans is currently at a four-year high.
The leading German coffee roaster Tchibo is reacting to rising purchase prices and getting its customers in the mood for price increases: On June 14, sales prices are expected to rise between 50 cents and 1 euro per pound, depending on the variety and country of origin. As the market leader, Tchibo is considered to be one of the most important signal generators for selling prices for coffee. The coffee roaster last raised prices at the beginning of 2017, but then lowered them several times due to lower purchase prices. “The prices for green coffee have risen significantly in the past few months. This applies in particular to high-quality Arabica grades,” is the current reason for the price increases.
Tchibo sells its products directly to end consumers through its own branches and depots and can therefore also set the final prices. Other coffee roasters deliver their products to food retailers, which in turn set the final prices. Aldi is an important pacemaker here. The discounter operates its own roasting plants.
Corona effects are subsiding
The competition from Tchibo is also more narrow-lipped: “We have also increased our factory sales prices due to the increased total costs in coffee purchasing,” a spokesman for Jacobs Douwe Egberts (JDE) only announced on request. A spokeswoman for the coffee roaster Dallmayr in Munich expressed understanding for “every merchant who passes on rising costs”, but does not want to comment publicly on their own future sales prices. “We are of course massively affected by the very clear current increase in coffee costs,” reported the Dallmayr spokeswoman. In addition, there would be higher costs for sea freight, packaging materials, shipping logistics and packaging disposal.
The international coffee organization ICO last reported in its April market report of a price rally amid an expected decline in production. As an additional price driver, the ICO identifies signs of an economic recovery after the corona recession year 2020, which is having an impact on the development of coffee consumption: “The negative effects on coffee consumption in the coffee year 2019/20 (until the end of September) with the outbreak the Covid-19 pandemic is waning and consumption is returning to its normal trend. ”
The ICO price index, which is made up of several types of coffee, rose in April alone by 1.4 percent to an average of 122.3 US cents per pound (454 grams) – an increase of 12 percent compared to April 2020. “This level stands for the sixth month in The result is an increase and the highest monthly average in over three and a half years, “according to the ICO. According to the Federal Statistical Office, import prices for green coffee were last in April almost 12 percent above the previous year’s level.
Arabica variety at four-year high
Raw materials analyst Michaela Helbing-Kuhl from Commerzbank even reports a four-year high for the high-quality Arabica variety. Arabica is currently being traded in New York at around 164 cents per pound, at the beginning of the year it was still under 130 cents. The analyst connects the Arabica bull market primarily with crop forecasts from Brazil. The latest estimate by the local forecasting authority Conab for the harvest of the 2021/22 harvest year there is at 48.8 million sacks (60 kg each) in the upper range of earlier estimates, but is around 23 percent below the record-high previous year with 63 million sacks.
With an annual per capita consumption of 168 liters, coffee is the most popular drink in Germany, ahead of mineral water and beer – and the trend is rising. It is true that during the corona pandemic, not so much coffee was drunk outside the home in coffee shops, cafes or bakeries. But consumers in Germany more than made up for this effect at home. The German Coffee Association recently reported an 11 percent increase in coffee consumption at home, while consumption outside of your own four walls fell by 23 percent.
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