Source: Radio New Zealand
Instant coffee prices have spiked this year. creative commons – pixabay – moritz320
The cost of food continues to climb, with Stats NZ figures showing some of the sharpest increases in staples like cheese, eggs and milk.
But few items rose as sharply in price as instant coffee – up 25.5 percent on last year, to an average $7.88 per 100g.
“I think for the refills of the Moccona coffee it was like maybe $6 or $7 and now it’s like nearly $11,” one listener told Morning Report.
“It can range a lot, like at some places they might be $6.50, other places they’re closer to $10,” said another.
“I just grab it and put it in the trolley. It’s a necessity, right?” a third added.
Coffee Supreme chief executive Andrew Lowe said there were a range of factors at play.
“It’s gone up because of drought. It’s gone up because China is drinking a lot more coffee … It’s gone up because we buy coffee in US dollars and the New Zealand exchange rate has just dropped a little, and that just makes it a bit more of a pinch,” he told Morning Report.
“It’s gone up because freight gets hard with a few wars, and so instability in the supply chain and commodity traders see coffee as a great way to make money. We’re seeing a 300 percent increase in the cost of green beans compared to this time a year to a year-and-a-half ago. And that’s incredibly high.”
With instant coffee specifically, Lowe said global corporates like Nestle had two- to three-year contracts with growers which were being renewed amid such cost pressures, “which is why you’re seeing it spike so aggressively all at once”.
Lowe said for a long time farmers had been selling much of their product at below cost, offsetting that by working “with brands like Coffee Supreme at the specialty level to create a higher quality product and get a better margin as a mix”.
“But what they’re doing now, because of their confidence in the market over the last 12 months, is they’re planting trees, which is great, so… supply will go up.
“But it’s a crop – it takes two to three years to bear really great fruit. And so while we’re seeing good signs now, we won’t benefit from that for a year or so.”
Speciality coffee products tend to move around in price less, he said, while instant coffee “goes up and down on the commodity markets way more, so it’s more volatile”.
“We’re working really hard with farmers, with our factories and with our process to keep costs down where we can.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
