Coffee: lower bean prices no relief for caffeine addicts

Coffee bean prices are falling. Futures for high-end arabica beans, used in espressos, briefly touched $1.88 a pound this week, a one-year low. But that does not mean caffeine addicts will get a break on the cost of their morning brew. Already the price of a premium takeaway coffee in Britain has climbed 7.9 per cent since January alone, according to ONS data.

Britons can blame a long and complicated value chain for the sticker shock. In a £2.90 cappuccino, the coffee itself only accounts for 5 per cent of the cost, or about 14.5p, says consultancy Allegra. Rent, labour, administrative overhead and taxes make up 78 per cent of the overall price. Staff costs make up the largest portion, well over a quarter. Average UK earnings are already up 5 per cent in the last year.

Any let-up in coffee bean prices is also being offset by higher milk prices. These, which make up 5 per cent of the input cost, averaged 62p a pint in September, according to the ONS. That is up by more than a third this year and is the highest since records began in 1971.

So far, consumers are not cutting back on their daily stimulants, though. Britons drink 98mn cups of coffee a day. The UK café and coffee shop market is worth $5.6bn, a 36 per cent increase from a year ago, according to consumer research group IbisWorld.

Starbucks said revenue in the most recent quarter rose 9 per cent to $8.1bn thanks to price increases and demand in its key North America market. The gains came despite a steep sales drop in China — its second most important market — as a result of the country’s zero-Covid restrictions.

Like lipsticks, £4 flat whites are small indulgences that people will allow themselves during a time of belt-tightening. It is just a shame that only a fraction of the 14.5p spent on coffee beans ends up with the farmer.