Frequent extreme weather events in major coffee-growing regions are contributing to the rising cost of coffee beans.
Professor Vinh Thai, Professor of Logistics and Supply Chain Management at the Royal Melbourne Institute of Technology (RMIT), explained there are several key factors contributing to the rise of coffee beans, with the first being the havoc wreaked by extreme weather on key supply markets such as Brazil and Vietnam.
“The continuing increase of container shipping rates and other supply chain issues, by which the lion’s share of coffee bean shipments are transported, also greatly contribute to the cost of coffee.
“Roasters may need to pass these costs onto cafes, who, in turn, may do the same to customers.”
Bernardo Figueiredo, Associate Professor in Marketing at RMIT, believes the increasing cost of coffee may strain consumers who see it as part of their daily ritual.
“Even countries historically not known for coffee consumption are experiencing a surge in demand as consumers are drawn to coffee’s aspirational image and functional benefits, leading to innovative product offerings tailored to local tastes.
“For Australians, the rising coffee prices mean that their daily cup of coffee may become more expensive, impacting both casual drinkers and dedicated coffee enthusiasts. This could lead to changes in consumer behaviour, such as opting for cheaper alternatives, reducing consumption, or switching to home brewing.
However, Figueiredo believes that given the cultural importance of coffee as a social and lifestyle symbol and its growth among the younger segments, it is unlikely that this would decrease the demand for coffee.
To learn more about hot beverages in the P&C channel, check out the feature in C&I’s latest issue here.
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