The “Coffee Report 2022” that has just been presented ranks generous coffee drinkers in this order: Most Germans who are willing to pay more for quality coffee live in Hamburg, with a share of 60 percent. This is followed by Berlin, Saarland and North Rhine-Westphalia, each with 57 percent. At the end are the people of Saxony and Saxony-Anhalt with 49 percent.

But even if the Germans drink an average of 3.3 cups of coffee a day or 169 liters a year and no other drink is higher: With the current high food prices, people are also saving on coffee purchases. Every third German spends between eight and ten euros for a kilogram of coffee, every fifth sets a price limit of eight euros for a kilogram pack of coffee powder. All this says a representative survey of 5000 coffee drinkers on behalf of Tchibo, the business magazine Brand Eins and the online service Statista.

In fact, the situation among the major coffee roasters in the country is more tense than it has been for many years. All of them face similar tasks. “The cost increases are a major challenge for everyone involved,” says Johannes Dengler, member of the management of Dallmayr Kaffee, in an interview. Purchasing your own green coffee has increased in price by 100 percent for the Arabica variety and by 50 percent for Robusta. And this is only a part of the surcharges.

On the international coffee exchange, a common offer for Arabica coffee currently costs around 2.30 dollars (2.19 euros) per British pound (454 grams). A year ago it was about half. The main reason for the increase is poor harvest yields after a long drought in the most important growing country, Brazil, and in Colombia. The coffee farmers see this as one of the consequences of climate change and the lack of rainfall.

There are already direct consequences in retail: Last February, the Hamburg-based coffee roaster Tchibo reacted to the situation and increased the sales prices by between 50 cents and 1.30 euros per pound. Since then, the standard offer Feine Milde has cost just under seven euros. There is no statement on possible further price increases.

They would be absolutely necessary, because there are now cost increases, for example for packaging materials such as paper or aluminum. The same applies to transportation. Shipping a container of green coffee from Latin America or Asia to Northern Europe currently costs five to ten times what it was before the corona pandemic.

Expensive energy prices are also hitting companies hard, after all, coffee roasters mostly use natural gas to heat the coffee beans. According to Dallmayr, expenditure on energy in coffee roasting has increased sixfold.

“The cost pressure is huge for us. We have to pass on the price increases, otherwise we are jeopardizing our existence,” says Dengler. Finally, Dallmayr’s out-of-home business has collapsed. What is meant is the sale in hotels, restaurants and gastronomy. Above all, the congress business is nowhere near the level it was before the corona pandemic and it will “not come back to 100 percent anytime soon”.

All in all, according to Dallmayr, the coffee roasters needed about two euros more per 500-gram pack. His company has largely passed on the increases in its own purchase prices to the retail trade, says manager Dengler. However, the supermarket chains, for their part, were still reluctant to pass it on in certain respects. “The price increases in the market have not yet fully reached the end consumers,” says Dengler.

This means that some retailers are currently avoiding large price hikes on coffee, forgoing part of the profit margin and fueling price competition on the product that is extremely important to them. The pound pack of coffee powder has been considered a so-called corner product in retail for decades, which is intended to attract customers to the shops with the most attractive price possible.

It is fitting that retailers are currently largely refraining from price campaigns for coffee. A pound of coffee from Dallmayr, Jacobs or Melitta is not available every few weeks at a special price, but costs a standard price. “Our customers in retail and gastronomy have to manage the balancing act between value for money and cost-effectiveness,” says Dengler about this price strategy.

The biggest brands of filter coffee are Jacobs, Tchibo, Dallmayr and Melitta. Jacobs is owned by the Jacobs Douwe Egberts Peet’s group, the other suppliers are family businesses. The discounters Aldi and Lidl have their own coffee roasters and house brands.

But the price increases in purchasing and processing lead to further reactions. For example, coffee roasters are launching new varieties that are made with cheaper green coffee beans. After all, Arabica or Robusta are not the same all over the world.

A rather cheap cultivation country is Vietnam, Honduras or Peru also supply so-called “low grade coffee”, beans of lower quality. Dallmayr is also using this trend. Other types of coffee are also added: Barista coffees made from Arabica beans then contain ten percent of the much cheaper Robusta beans.

Despite all this, it is foreseeable that coffee will continue to become more expensive in the coming months. One step ahead of the coffee roasters, in the case of the green coffee traders, prices are the most important issue. “The roasting industry has not yet priced in all the price increases. One or two price rounds are still missing before all cost increases are passed on,” says Arthur Darboven, managing partner of Benecke Coffee, one of the five largest green coffee traders in Germany. He is the son of Albert Darboven, the owner and CEO of the coffee company of the same name.

One or the other major customer of Benecke Coffee among the coffee roasters has not yet fully passed on the price increases. This means: There is still a need to catch up on price increases in several places in the coffee business.

There is also uncertainty among green coffee traders about developments over the next few months. “We experience capricious weather in Brazil almost every day. The green coffee market is characterized by high volatility,” says Darboven. In Latin America extremes in weather are becoming more frequent. Drought and ground frost occur more often than earlier in the year. Brazil, Vietnam and Indonesia are particularly affected. Green coffee is only grown in countries around the equatorial belt.

The changes can be described using the example of the cultivation country Nicaragua. “In 25 years, the country may still have 35 percent of today’s coffee harvest. Central America is drying up and that has consequences for the entire coffee cultivation,” says Darboven. With 42,000 tons of coffee sold last year, Benecke Coffee is relevant for the global coffee market. In addition to Germany, the main countries in sales are Turkey and the USA.

One profiteer in the coffee business in Germany is the state, which makes the hot drink more expensive than in many other countries. In Germany, there is a tax of 2.19 euros per kilogram in roasted coffee. Dating back to the 17th century, the current excise tax was introduced by the British and Americans in 1948 and has never been abandoned. In addition, there is sales tax of seven percent.

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