Gilkatho Cappuccino Price Index™ shows steady rise in coffee price
TThe March Quarter Gilkatho Cappuccino Price Index™1 has shown a steady rise in Australian consumer coffee prices, with the latest report showing Sydney as still having the lowest price takeaway coffee, while Melbourne still offers the best price for dine‐in coffee drinkers. [See Table 1 – 2011 Q1]
Gilkatho managing director Wayne Fowler said the March quarter price increases were in line with Gilkatho’s Cappuccino Price Index™ predictions from January, but were less than expected.
“Back in January we predicted that the 77% rise in coffee futures in 2010 (their highest level since 19972) would outstrip any gains made by the Aussie dollar. As such, we expected that many café operators would be forced to pass these higher wholesale prices on to their retail customers. These pressures are starting to impact on consumer prices, but it seems many operators are choosing to absorb these increasing costs – for now.” [See Table 2 --‐ National Gilkatho Cappuccino Price Index™ for all takeaway and dine--‐in venues]
Mr Fowler said there were a number of factors conspiring in international coffee markets that meant further price increases were likely in 2011.
“There are a number of dynamics gathering momentum internationally which will see both a decreased supply and increased demand for coffee leading to higher prices in 2011:
On the domestic front, Mr Fowler said an interesting tension on consumer coffee prices was being provided by Australia’s higher workforce participation rate with the current unemployment rate sitting at just 4.9%.4
“Higher workforce participation results in a competitive employment market. In searching for that competitive edge, employers are more likely to provide cost effective incentives for employees in the workplace. An employee may pay up to $3.72 for a takeaway coffee, but many employers are moving to provide a workplace coffee machine in the office at a cost of about 35 cents per cup.
“We know from our own research that 65% of workplaces claim to have a 'coffee culture'. 5 This growing ‘coffee culture’, combined with increased consumer sensitivity to coffee prices is inspiring many Australians to become workplace baristas. We would expect this trend to continue as café operators are forced to pass on higher wholesale prices to retail customers.”
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“Back in January we predicted that the 77% rise in coffee futures in 2010 (their highest level since 19972) would outstrip any gains made by the Aussie dollar. As such, we expected that many café operators would be forced to pass these higher wholesale prices on to their retail customers. These pressures are starting to impact on consumer prices, but it seems many operators are choosing to absorb these increasing costs – for now.” [See Table 2 --‐ National Gilkatho Cappuccino Price Index™ for all takeaway and dine--‐in venues]
Mr Fowler said there were a number of factors conspiring in international coffee markets that meant further price increases were likely in 2011.
“There are a number of dynamics gathering momentum internationally which will see both a decreased supply and increased demand for coffee leading to higher prices in 2011:
- • the world supply of Arabica coffee remains short, despite Brazil’s record 2010 crop of 55 million bags;
- • increasing domestic consumption in Brazil (10% between 2008--‐2010) and China (40% between 2008--‐2010) has had contributed heavily to global supply shortfalls;
- • record rainfall in Panama in 2010 resulted in a 16% decrease in coffee production due to mould damaging the leaves of coffee plants;
- • reduced yields in coffee crops have been reported in Guatemala and Costa Rica; and
- • the declining value of the US dollar has resulted in higher commodity prices.3
On the domestic front, Mr Fowler said an interesting tension on consumer coffee prices was being provided by Australia’s higher workforce participation rate with the current unemployment rate sitting at just 4.9%.4
“Higher workforce participation results in a competitive employment market. In searching for that competitive edge, employers are more likely to provide cost effective incentives for employees in the workplace. An employee may pay up to $3.72 for a takeaway coffee, but many employers are moving to provide a workplace coffee machine in the office at a cost of about 35 cents per cup.
“We know from our own research that 65% of workplaces claim to have a 'coffee culture'. 5 This growing ‘coffee culture’, combined with increased consumer sensitivity to coffee prices is inspiring many Australians to become workplace baristas. We would expect this trend to continue as café operators are forced to pass on higher wholesale prices to retail customers.”
ENDS
