Save
How falling coffee prices will impact your local cafe
Australians are ditching their coffees on the way to work, with the morning brew becoming an unlikely victim of the COVID-19 pandemic.
How falling coffee prices will impact your local cafe
Australians are ditching their coffees on the way to work, with the morning brew becoming an unlikely victim of the COVID-19 pandemic.
The Coffee Outlook Report by RaboBank estimates global coffee demand to decline by 0.8 per cent to 164.1 million 60-kilogram bags in 2020.
The report highlighted how stopping into a coffee shop on the way to work has taken a backseat with out-of-home consumption due to unemployment or lockdown being a major headwind for the commodity.
This could either be a win for struggling cafes, who are now able to purchase coffee cheaper, or the consumer, if the cafes pass on the savings to consumers.
The pressure on global coffee prices may herald good news for cafes and food service outlets trying to get back on their feet after the COVID-19 lockdowns, although it won’t necessarily translate to lower prices for consumers, according to Rabobank Australia commodity analyst Charles Clack.
“Indeed, less out-of-home purchasing has seen downward pressure on a number of soft commodities around the world, which could make the raw ingredient prices for Australia’s cafe and restaurant sector, including coffee and sugar, dip lower,” Mr Clark said.
“This may help these businesses as they come out of COVID-19 lockdown and over the coming year or so.
“That said, this won’t necessarily translate to cheaper prices for the consumer, as there is a lot more that contributes to the cost of the flat white you enjoy from your local cafe than the commodity prices alone, with labour, business overheads and other costs a significant part.”
Rabobank Agri Commodity Markets Research senior analyst Carlos Mera explained that it’s not just Australians who have fallen out of love with caffeine, preliminary estates show the United States demand for coffee will fall by 2 per cent in the calendar year.
US consumption is likely to fall due to a decline in out-of-home coffee purchased and the low level of unemployment benefits.
However, Mr Mera said swapping a store-bought coffee for one at home is unlikely to offset the drop in consumption witnessed in April.
“In Europe, we do not expect such a large drop in demand because income levels of those unemployed are more protected in most EU countries,” she said.
“We initially expect a 0.5 per cent reduction in coffee demand in 2020 in the EU-27+UK countries, with the decline concentrated in the UK, where there is a tea culture at home as well as lower unemployment benefits, and in southern Europe, where there has been a lower volume of tourists,” Mr Mera concluded.
About the author
About the author
Expenses
Insurance prices rise despite payout falls
The COVID-19 pandemic has seen insurer payouts fall by $500 million, but Australian consumers are continuing to pay more, the consumer watchdog has revealed. ...Read more
Expenses
CBA cops civil proceedings for overcharged interest
ASIC has commenced civil penalty proceedings in the Federal Court against the Commonwealth Bank over the bank charging an interest rate on business overdraft accounts that was substantially higher tha...Read more
Expenses
What are the top 10 most expensive cities in the world?
Logistical issues and currency fluctuations caused by the COVID-19 pandemic has seen the most expensive cities in the world drastically change, new research has revealed. ...Read more
Expenses
Sydney adviser pleads guilty to misappropriating $2.9m
A Sydney financial adviser has pleaded guilty to misappropriating $2.9 million in his clients’ funds. ...Read more
Expenses
Telstra set to refund 10,000 customers
Ten thousand past and present Telstra customers are entitled to a refund due to being overcharged a total of $2.5 million. ...Read more
Expenses
iSelect in hot water for energy plan comparisons
Comparison tool iSelect has been ordered to pay $8.5 million in penalties for making false and misleading representations about its electricity comparison service. ...Read more
Expenses
Pandemic puts stopper in big spending
Two-thirds of Australians have seen their finances impacted by COVID-19, according to new research – and it’s affecting everything from holidays to houses and careers. ...Read more
Expenses
The financial products giving Australians the most grief during COVID-19
The Australian Financial Complaints Authority (AFCA) has received 7,420 complaints about financial products since the onset of the pandemic. ...Read more
Expenses
Insurance prices rise despite payout falls
The COVID-19 pandemic has seen insurer payouts fall by $500 million, but Australian consumers are continuing to pay more, the consumer watchdog has revealed. ...Read more
Expenses
CBA cops civil proceedings for overcharged interest
ASIC has commenced civil penalty proceedings in the Federal Court against the Commonwealth Bank over the bank charging an interest rate on business overdraft accounts that was substantially higher tha...Read more
Expenses
What are the top 10 most expensive cities in the world?
Logistical issues and currency fluctuations caused by the COVID-19 pandemic has seen the most expensive cities in the world drastically change, new research has revealed. ...Read more
Expenses
Sydney adviser pleads guilty to misappropriating $2.9m
A Sydney financial adviser has pleaded guilty to misappropriating $2.9 million in his clients’ funds. ...Read more
Expenses
Telstra set to refund 10,000 customers
Ten thousand past and present Telstra customers are entitled to a refund due to being overcharged a total of $2.5 million. ...Read more
Expenses
iSelect in hot water for energy plan comparisons
Comparison tool iSelect has been ordered to pay $8.5 million in penalties for making false and misleading representations about its electricity comparison service. ...Read more
Expenses
Pandemic puts stopper in big spending
Two-thirds of Australians have seen their finances impacted by COVID-19, according to new research – and it’s affecting everything from holidays to houses and careers. ...Read more
Expenses
The financial products giving Australians the most grief during COVID-19
The Australian Financial Complaints Authority (AFCA) has received 7,420 complaints about financial products since the onset of the pandemic. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
