Weak ruble weighs on imports: Russia can no longer afford good coffee

Weak ruble weighs on imports
Russia can no longer afford good coffee

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Coffee beans have been becoming cheaper on the commodity exchanges for over a year. But Russian coffee houses don’t benefit from this. Imports of the well-known Arabica and Robusta beans must be paid for in US dollars. It is becoming more and more expensive due to the weak ruble.

In Russian cafes and coffee houses, the quality of coffee suffers due to the weak ruble. Coffee beans are purchased on world markets in US dollars, the import company RTC-Trading explains to the Russian business agency Prime. The high exchange rate of the ruble reduces purchasing power. “Most likely, coffee house owners will now have to buy inferior coffee,” it continues.

Rubles / US dollars ,01

The development on the world markets has nothing to do with this, as the import company explains. Prices for the dominant bean varieties Arabica and Robusta have not increased, it explains. There are also no changes in the producing countries: the imported coffee is still imported from Central America, Africa and Asia. Only the Russian market is affected.

In fact, the prices of Robusta beans on the commodity exchanges have even fallen: from $2,800 per ton in June to $2,400 in October. Arabica has also become significantly cheaper on the stock exchanges over the past year; the variety is currently priced at $3,260 per ton.

Rubles in free fall

But Russian coffee houses are not benefiting from the weak ruble; it has been steadily losing value for more than a year: in July 2022, 53 rubles were still needed to get one US dollar. Russian entrepreneurs now have to pay twice as many rubles for one US dollar. The background is the Western sanctions against Russia, which are increasingly weighing on the trade balance. In addition, ever larger sums are being invested in the military budget for the war in Ukraine, which the government in Moscow describes as a special military operation.

Large Russian retailers are also suffering from the weak ruble, but are making cuts in other areas in order to be able to offer customers the best possible coffee. “We have tightened our belts,” the managing director of the Tanuki Family restaurant chain, Alla Bondarenko, was quoted as saying by the Prime business agency. “We maintain our prices, forego profits and margins, but in doing so maintain the loyalty of our guests.”

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