“Perfect Storm” – What’s Happening to Coffee Prices?

Coffee prices in Australia are skyrocketing, but could the same happen in New Zealand?

“It’s kind of a perfect storm,” said Joe Stoddart of Havana Coffee Works in Wellington.

“We have a scenario where there was a frost in Brazil last year, which meant that piles of coffee were damaged.

“Brazil is the largest coffee producer in the world and that means there is a limit to how much high quality coffee you can buy in the world, which is added when you come out of a drought and then you have shipping delays and prices in certain situations around the world [are] quadruple.

“Right now, for growers, it’s hard to even get their hands on a food-grade container, let alone book something that’s coming to this part of the world.”

Stoddart said the situation was not limited to New Zealand and it was not just about shipping delays.

“You have a scenario where all the costs go up because of social distancing in developing countries, [which are] coffee growing countries, as well as what we are going through here in Australia and New Zealand. The price of diesel is rising.

“Overall, costs are exploding.”

Stoddart said supply and demand dictate the price of high-quality coffee. If there is a glut of raw coffee in the world the price will go down and if there is a limit or a perceived limit on the coffee then the price will go up.

When asked if coffee here could fetch the sky-high prices of $7 a cup as quoted in Australia, Stoddart replied that it might have to do with perception.

“What you have to understand is that this is all a perception of rising costs, so in my position I buy most of my coffee directly from the people who produce it, so I don’t necessarily let people who are the middlemen take some of that profit.

“I’m in a position where I can make them more money while not spending too much money, so I’m in a pretty luxurious position. I’m not buying at a spot price set by the market, but my job is like an intermediary between the producer and the client here.

“Some grocers and people who sell coffee here are going to be in that position, but not necessarily everyone, because it’s how you position what you do and how far you see what’s happening, happening.

“You really have to understand the bigger picture, but you also have to understand that the cost of living for producers is exorbitant and they may not necessarily have gotten what they should have gotten a long time ago. “

But is it time to invest in a machine to make it yourself at home?

“As coffee drinkers, we spend an average of $1,800 to $2,200 a year on cups of coffee in a coffee shop,” Stoddart said.

Stoddart said if you were going to buy an espresso machine, even a second-hand one, from TradeMe, you should consider that price to start with and around $1,000 a year for machine maintenance, plus $40 to $60 per kilo. for high quality roasted coffee, of which New Zealand had plenty.

“If you do that…then you save your hand on your fist, but the real deciding factor is that the suburban cafes and cafes that need us to buy them coffee still need us to buy them coffee… you’ve been very careful that the cafes you like to socialize in don’t collapse because you’ve decided never to go get a coffee again, that’s a double-edged sword.

“We really need to support these cafes, but if you’re really passionate about high-quality coffee, definitely invest in it, because life is far too short to drink bad coffee.”

And is New Zealand coffee really better than Australian coffee?

“Part of the scenario is that we have a really saturated market and that market is of a very high caliber,” Stoddart said.

“Over the past 20 to 30 years, we’ve made each other stronger, but we’ve all raised our own bar.

“We scared them when we went to Australia from New Zealand, because they think they’re great and nothing has a mark on them, but Australians will come here and say that’s the best coffee they’ve had and so it’s kind of an industry secret to some extent.

“What we do to the product, it comes from so far overseas that we really treat it with respect, so the industry in New Zealand is on the cutting edge.

“We go way beyond our weight and that’s because the customer demands it. It really comes down to Kiwis hating to have a bad cup of coffee, so we have to make it amazing.”


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