Enjoying coffee is becoming more and more expensive in Germany too. Because of the ongoing inflation and the harvest situation, fans of Tchibo and Co. in this country will probably have to dig much deeper into their pockets again.
In the midst of record-high inflation, consumers in Germany will probably have to dig deeper into their pockets again for their favorite drink. The main reason for this is the persistently unfavorable harvest situation in Brazil, by far the largest coffee producer in the world. It has been driving up the purchase prices for green coffee throughout 2021. Arabica beans, which account for around 60 percent of global coffee production, are trading at a price level the coffee market has not seen in a decade.
The leading German coffee roaster Tchibo is reacting to the constantly rising purchase prices and on Monday prepared its customers for price increases for the second time in nine months: On February 21, sales prices are to rise by between 50 and 130 cents per pound, depending on the variety and country of origin. As the market leader, Tchibo is one of the most important indicators of coffee sales prices. The coffee roaster had already increased prices by 50 to 100 cents a pound in June last year, after several price cuts in previous years.
Even then, the background was higher purchase prices on the world markets. They have continued to rise sharply since then. “We hesitated for a long time, but green coffee prices have risen by 50 percent since last summer. We are taking this development into account and are now adjusting our sales prices,” said Tchibo spokesman Arnd Liedtke. Tchibo assured that sales prices would fall again “as soon as green coffee prices allow it”.
Coffee prices are rising: is the competition geared towards Tchibo again?
Tchibo is usually the only provider to communicate its pricing. Because the retail group sells its products directly to end consumers via its own branches and depots as well as online and can therefore also set the final prices. Other coffee roasters supply their products to the food retail trade, which in turn sets the final prices. Aldi is considered an important pacesetter here. The discounter operates its own roasting plants. Aldi did not respond to a request for coffee prices on Monday. As usual, the competition from Tchibo was tight-lipped: “We are not making any statements on the subject of coffee prices,” said Darboven in Hamburg, for example.
There are a cocktail of reasons behind the price hikes on the buy side. “Coffee prices continue to reflect the scarce supply, especially from Brazil,” summarizes the raw materials expert Claudia Wellenreuther from the Hamburg research institute HWWI. “The impact of the extreme drought early in the season and subsequent frost on the Brazilian coffee crop continues to be reflected in high coffee prices.”
In addition to the rising prices on the exchanges for green coffee, buyers are also getting in the way of the stronger dollar, because both the Arabica coffees traded in New York and the Robusta variety traded in London are quoted in US dollars. In addition, the ongoing tensions in the global supply chains with delays and drastically higher freight rates in container shipping are also being felt in the coffee business.
According to Commerzbank commodities analyst Carsten Fritsch, global demand has also made up for the corona-related dent of the previous year. “The global coffee market is facing a supply deficit.” Although the price of coffee is likely to fall over the course of the year, it will remain at an elevated level. Because in 2022, Brazil’s coffee harvest could also be disappointing as a result of severe storms and drought and frost last year.
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Coffee is the German’s favorite drink
In its December market report, the International Coffee Organization ICO recently reported on an ongoing price rally in the midst of a slump in exports, especially from South America, where Brazil and Colombia are among the top producers. With its price index composed of several types of coffee, which was just under 116 US cents per US pound (454 grams) at the beginning of 2021, the ICO recorded an increase of 75 percent to around 203 cents by the end of the year – a high since September 2011 with 213 Cent.
The price of the Arabica variety, which is very popular in Germany, has more than doubled. “While Arabica still cost around 120 US cents per pound at the beginning of 2021, the price reached a good 250 US cents at the beginning of December, the highest level in more than ten years,” reports Fritsch. According to the Federal Statistical Office, the import prices for green coffee in Germany in December were a good 70 percent above the previous year’s level. At the consumer level, according to data from the statisticians, prices at the end of the year were on average 8 percent higher in a year-on-year comparison.
With a per capita consumption of 168 liters per year (as of 2020), coffee is the most popular drink in Germany, ahead of mineral water and beer – and the trend is rising. During the corona pandemic, not so much coffee was drunk outside the home in coffee shops, cafes or bakeries for long periods. However, consumers more than made up for this effect at home.
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