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Price rises fragment coffee industry

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  • Price rises fragment coffee industry

    Probably more for the business owners on CS but an interesting item on todays Inside Business program.

    Coffee bean price rises are threatening Australias coffee industry, with shop owners arguing against holding a price war.

    http://www.abc.net.au/insidebusiness/content/2011/s3276518.htm

  • #2
    Re: Price rises fragment coffee industry

    I see some of the people quoted in the article have been reading stuff that I have already written....

    The fragmentation  is because of the wave of new roasters coming in, all looking for a piece of action, as well as large established roasters consolidating their clients in the face of the new wave of roasters snapping at their heels, and already saturated in their own markets and moving outwards into new (for them) areas. Prices are kept down to win and compete for clients, and players reduce their own viability and profitabilty. As Scotty Bennett said, it cant go on forever...

    That said, look at the varying degrees of quality available. You can pay 30 dollars, or 25 dollars, or 20 dollars, or 15 dollars a kilo, or whatever..... take your pick if you want to reduce your quality. How far do you want to reduce? Its up to the individual coffee roasters and cafes, and very few cafe owners are coffee snobs.

    We recently bought a sample of a good on paper specification origin to cup off in comparison to our current spec stock. Yes it was cheaper....and Yes there was an immediate noticeable drop in the quality in the cup. We wont / cant replace it into what we do.

    Some cafe owners are scared to increase their price to cover the increase in cost of coffee. Knowingly allowing their margins to reduce is very silly, and if everyone increased a little bit at a time there would be no problem. And does anyone really think that an increase in 5 cents per cup will drive coffee drinkers away? As I have said many times, the real increase in the cost of doing business in not in the increase in price of coffee, its in all the others costs of running your business which are rising out of control around everyones ears. Coffee is the current scapegoat.

    The increase in price of greens and its effect on the cost of browns and cuppas, while a legitimate occurence, is all the usual storm in a tea cup, makes an interesting read, and is taken seriously by people that havent thought the rest of it (non coffee costs and the effect of other industry forces) out.

    In the meantime the el cheapo vendors are making hay while the sun shines, trying to consolidate clients and market share by increasing their turnover markedly and apparently ignoring the bottom line (profit), possibly having to work twice as hard just to make the same amount of profit or little more....and proving yet again that only a very small percentage of cafe owners are coffeesnobs and the rest are either unable to cup coffee discerningly, dont care, or can be hoodwinked by those putting low grade low priced product in an expensive packet with "the right things" printed on, and listen seriously to salesmen telling them that they can offer a "better deal" than the encumbent supplier....(in this economic climate????? gimme a break...)....ever spiraling downwards instead of wanting to keep quality and profit up where it needs to be to satisfy an ever more demanding and discerning market......who I think really is prepared to pay for the good stuff.

    Shows there are plenty of people out there with a one eyed view, no?

    Rgdz,
    Attilio
    very first CS site sponsor.

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    • #3
      Re: Price rises fragment coffee industry

      Originally posted by 1F2B3C2A31061A363F3F3C3C590 link=1311481447/1#1 date=1311484780
      Shows there are plenty of people out there with a one eyed view, no?
      Absolutely.

      A good look at the history of (for instance) the market for sound equipment shows that no matter how deep the depression the only sector that continued to grow was the high end.

      Quality sells.

      Greg

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