Lately, we get many questions about price increases in the coffee market. As you also might have heard or read about in the news. Newspapers are mentioning abstract names as C-market price and stock exchange. What does this mean and how is this relevant for us?
The "C market" price is the benchmark price paid for Arabica coffee traded on the New York commodity market. Always in dollars per pound of coffee. This C-market price has reached an all-time high, surpassing even the prices of the 1970s, before the price collapse in coffee. The commodity coffee exchange price is market and speculative driven. When in Brazil there is frost late in season then it is likely market speculation bumps up the c-market price in example. While we don’t directly buy from this market, many of our coffee partners align their transactions to it, both because of industry norms and the broader interconnected market system.
We have always paid green coffee prices that are well above the current C-market price, partly due to different qualities we buy (higher quality = higher price). But as lower-quality coffee prices rises, higher-quality coffee prices tend to follow suit. If the price of lower-quality beans increases by 200%, it would be unusual for the prices of higher-quality beans to stay the same. Otherwise, they risk being undercut.
For us and many other roasters, specialty coffee has always represented more than just a product; it’s also a philosophy of trade. We focus on transparency and greater equality in the value chain. The C-market has now established a price that is economically sustainable for producers. However, there are still concerns. Producers feel insecure about long-term price stability and rising costs. They are also facing significant challenges due to climate change.
Cooperatives, which buy parchment (pulped cherries) directly from producers, are also feeling the pinch. They often have to pay farmers upfront, before the coffee is ready for export or sale, imagine it means they need significantly more cash on hand now than in previous years when prices doubled. Farmers depend heavily on these cooperative structures, making the situation quite complex.
As for price trends, we don’t expect a significant drop in prices anytime soon. Vietnam as origin, one of the key drivers of price increases, is already facing lower production levels again. And with ongoing climate change challenges, it would be a blessing if Brazil, which accounts for over half of the world’s Arabica coffee production, avoids production difficulties in the coming years.
What does this mean for us?
Our selling pricing structure relies significantly on the price we pay to farmers for green coffee. However, we believe we have some flexibility when it comes price vs quality. We've already been in discussions with our regular origine partners to align supply with our needs and see if we can balance out.
Not the least important, the situation underscores the need for focus on efficiency in all areas of our business—labor, packaging, and operations. For example, the recent increase in the volume of coffee per bag—from 200g to 250g packs —has had a significant economic impact on our operations. Sale-price per packaging is a bit higher, but the consumer-price per gram keeps the same.
We will aim to keep our retail offerings diverse in pricing, ensuring that we still have competitive options available. For now, we do not expect any general price increases of our retail products in the upcoming periode.