Coffee is not immune to the price increases observed for the grocery basket or restaurant meals. Consumers’ favorite drink is also rising in cost. Buy it in bulk at the grocery store or in a cup at the neighborhood café.
“We had to increase the prices last week for coffee drinks,” says Line Guérin, director of operations at Brûlerie St-Denis in Montreal. “There, I have to re-evaluate the prices for next week. Our coffee comes from all over the world. It goes through importers. We are dependent on price fluctuations. It can go to double for some grains. ”
However, prices had been stable for several years. “I haven’t had to increase them for five years,” notes Line Guérin. It’s linked to COVID-19, the high cost of labor, and transportation costs. Climate change is also affecting crops in general. ”
“We have a lot of challenges with sourcing on many levels,” adds Marc Benzacar, COO, Quick-Service Casual Restaurants, MTY Group (Café Dépôt, Café Van Houtte and Thimothy’s World). “For 8 to 10 months, the price of containers has been increasing every month. We have problems in Brazil, Colombia, Guatemala and even Ethiopia. There is a shortage of jobs everywhere. There are hikes at every link in the chain. ”
It’s getting hot on the stock market
In the US markets, the price of coffee paid to producers was 98 US cents per pound in the summer of 2020. It has been hovering around US $ 2.40 per pound in recent weeks.
The scarcity of beans, especially from Brazil, the biggest coffee producer, is the main culprit. Due to droughts, followed by freezes in the last year. Also because, according to the United States Department of Agriculture, Brazilian farmers do not deliver the promised coffee at a cost already fixed in an attempt to resell it to others at the higher list price, could one read this week in the Financial Times.
“The costs have increased a lot,” says Dominic Drouin, co-owner of Caffè in Gamba, in Montreal. “We are starting to get letters from our roasters announcing increases. I haven’t seen such high increases in the seven years since I have been a homeowner. Because it doesn’t just apply to coffee. The prices of packaging have increased exponentially. The case of cardboard glasses jumped from 35% to 40%. It is major! It pulls from all sides. ”
Each time, however, MTY, whose small regular filter coffee at Café Dépôt retails for $ 2.40, limits its price increase within a range of 3% to 5%. “We try not to pass the bill on to consumers, but we have no choice,” says Marc Benzacar.
For its part, Caffè in Gamba increased its prices from 5% to 6% in September. “We are on a structure of price increases twice a year,” explains Dominic Drouin, who anticipates a “spectacular” increase next March.
Year without sugar
In 2022, consumers could expect a jump of 10% to 15%. “We have a perfect storm, caused by the weather in Brazil, which has a big influence on the price of coffee and the logistics chain”, underlines Jérôme Grenier-Desbiens, co-owner of Structure Torréfacteurs, whose client is Caffè in Gamba in particular. . “The supply chain was already weak before COVID-19. The pandemic has exacerbated that. However, for small roasters like myself who buy direct from the farmer, the prices are mitigated. ”
Nevertheless, he announced to his fifteen clients that the costs would increase by 2.5% on the 1er December. To keep up with inflation, among other things. “It will also help to pay for the raw material, but we are less affected, because we do not buy producers linked to the stock market price, says Jérôme Grenier-Desbiens. The price on the stock market is what is going up ridiculously. ”
Are cafes, restaurants and grocery stores at risk of seeing their sales decline with inflated prices? “The three drinks the most drunk are water, tea and coffee,” recalls Line Guérin. People might go without alcohol or whatever, but not from a $ 3 coffee. ”
“Customers are resigned, because everything is increasing,” adds Dominic Drouin. It’s justified, not arbitrary. No one has an interest in posting prices that are too high. It’s important that it’s fair, in order to stay competitive. ”
Mr. Drouin also fears the slaughter for entrepreneurs who will resist increasing the prices on their menu. “I see a wave of restaurant and café closures coming in the spring,” he says. Because of the rising prices of coffee and paper absorbed by traders and not passed on to customers on time. We are often caught up in activities. Stopping to do calculations, we don’t like to do that! ”