Cyprus Mail

Consumers likely to ditch cafes for coffee at home amid price hikes

feature gina main coffeeshops have raised their prices but are trying to absorb as much of the increases as possible
Coffeeshops have raised their prices but are trying to absorb as much of the increases as possible.

Coffee has gone up on average 16.9% in past year, sugar 43%, low fat milk 22%

Coffeeshops have long been an integral part of Cyprus culture providing for a range of tastes from the kafenes for a traditional Cyprus coffee to a modern cafe for a macchiato.

However, as prices increase, a shift might follow this deeply ingrained habit.

Recent price rises across the EU are making a staple morning cup of coffee almost a luxury, according to Eurostat, while the International Coffee Organisation (ICO) predicts that consumers will choose drinking coffee at home over cafes and restaurants in the coming months.

Although the increase in the price of coffee itself did not raise a red flag for Cyprus on the Eurostat table, it did show the island in fifth place when it came to the price of sugar, which has risen more than 43 per cent in the 12-month period from August 2021 to August 2022.

“Kicking off the day with a mug of hot coffee is a daily routine for many. However, recent price rises might make this morning staple almost a luxury,” Eurostat said in its report.

Not all consumers have noticed the increase yet, but 34-year-old Demetra Athanasiou said she has. The civil servant said she recently started paying more for her daily caramel latte she buys from the same bakery every morning on her way to work.

“I recently acquired a moka pot and I sometimes make my morning coffee at home nowadays,” Athanasiou said.

“Just drink tea,” said Katerina Petrou.

The owner of Coffee Addicted, Andreas Plati, told the Sunday Mail that he noticed an approximate 10 per cent increase in the prices of coffee and milk he orders for his small café in Aglandjia in the past two months. He said sugar was also up on his latest order in the beginning of the month.

This was translated to his menu prices.

“I had to increase my prices at about 20-40 cents. But I would not wish to raise my prices further because I can already see my customers have noticed it and are dissatisfied,” the business owner said.

Several companies follow a similar approach, choosing to reduce their profit to maintain lower prices for consumers.

The price rises stem from the increase on raw materials and transport costs due to the energy crisis following the war in Ukraine said marketing manager at MGA Boutique Trading Coffee experts, importers of Hausbrandt Trieste in Cyprus, Giorgos Theodorou.

“We absorbed some of the cost and have cut our profit margins, but, inevitably, we had to transfer some part to our clients,” Theodorou said.

Following their consumer-centred strategy, the company so far proceeded with a small price increase. “We believe it is right to absorb part of the higher prices. If we allowed for the entire cost to reach our buyers, we would possibly lose customers,” the marketing manager explained.

Data for August 2022 show that the price of coffee in the EU was on average 16.9 per cent higher than in August 2021, while in August 2021, the price of coffee was on average 0.5 per cent higher than in August 2020.

For consumers that drink their coffee with milk and/or sugar, this morning ritual might be even more expensive since the prices of those items increased even more over the last year. The price of fresh whole milk increased on average 24.3 per cent between August 2021 and August 2022, while that for fresh low-fat milk increased by 22.2 per cent in the same period.

In August 2022, annual inflation for sugar was at +33.4 per cent, from +0.8 per cent in August 2021.

Data show that all four items registered an increase in prices in all EU member states, except for Malta, which reported no change in the price of fresh low-fat milk.

feature gina coffee production has also been impacted by climate change
Coffee production has also been impacted by climate change

When examining the highest increases in annual inflation for each product, Lithuania and Estonia feature in three of the four products: coffee and fresh low-fat milk for both, fresh whole milk (+45.8 per cent) for Lithuania and sugar (+81.2 per cent) for Estonia.

The largest annual inflation in August 2022 was reported for sugar, with notable rises in Poland, up 109.2 per cent, followed by Estonia (+81.2 per cent), Latvia (+58.3 per cent), Bulgaria (+44.9 per cent) and Cyprus (+43.2 per cent).

When it comes to coffee, Finland registered the highest annual inflation at +43.6 per cent in August 2022.

In terms of milk, Hungary, Lithuania and Croatia saw substantial rises in prices of both whole fat milk and low fat. The highest annual increases in prices for low-fat milk among the EU member states in August 2022 were logged in Hungary (+51.7 per cent), Lithuania (+46.8 per cent) and Croatia (+43.5 per cent).

According to the International Coffee Organisation (ICO) at the weekend, international coffee supply has not been able to meet demand at a time when inventories are low, said Vanusia Nogueira, attributing the lower global harvest in the 2021/22 coffee year to the effects of climate change.

“We have many climate problems in the top producing regions,” she told Reuters in an interview in Colombian capital Bogota. Although coffee prices had risen, growers were unable to deliver more product due to the climate-related issues, she said.

Total production for the 2021/22 coffee year hit 167.2 million 60-kilogramme bags, down 2.1 per cent from 170.83 million bags in the previous coffee year, according to ICO statistics.

As during the coronavirus pandemic, consumption is expected to increase in homes and decrease in cafes and restaurants, but overall volumes of sales and consumption should remain stable in 2023 she said.

“I don’t think there will be an impact in terms of volumes, but in the way coffee is drunk and in the quality, people are going to lower the quality of what they drink and change where they drink it,” she said, warning that producers of specialty coffees could be hardest hit.

Climate change is the coffee industry’s biggest challenge, she said, adding that the ICO is working on creating a resilience fund alongside banks and other organisations to look more closely at productive zones and climate change-resistant coffee varieties.

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