How Much?

….Is the correct response when ordering a caramel isced latte at Starbucks and being told by the Barista that it’s £5.30?

Key Points:

·   Coffee prices had surged to new all-time highs in 2024 on the back of poor harvests around the world, from Brazil to Vietnam.  Since then, the situation has deteriorated further, with weather patterns across the globe continuing to be unhelpful.  Arabica coffee was around US$2/lb in 2023, then hit US$3.50/lb in late 2024. This year has seen a further increase to just over US$4/lb.

·   Customers are already seeing these increases reflected in retail prices, whether it’s at the local coffee shop or supermarket.  Even though, usually,  there is a significant time lag between this taking place – as hedging and forward purchases roll off.

·   There’s no respite either when you decide to select your favourite slice of chocolate cake to go with your coffee. The very same weather patterns, along with cocoa bean diseases, have turbocharged the price of chocolate, which are now an incredible 4x where they were just 3 years ago.

·   Finally, even the milk you may use in your coffee remains frothy, with the price of milk and milk-substitutes up over 60% from their pre-2022 levels, mainly as a function of surging gas and electricity prices in the UK.

·   That trip to Starbucks, Costa or Café Nero may offer you little change if you hand over a tenner for your usual coffee and cake.