Giuseppe Lavazza Predicts Further Surge in Coffee Prices

Coffee prices are expected to remain elevated and are unlikely to decrease until mid-next year due to significant supply chain pressures, according to the Italian coffee company Lavazza.

“We have never experienced such a price spike as we are seeing now,” said Giuseppe Lavazza, chairman of the company. He acknowledged his incorrect prediction last year that prices would decline this year. On Monday, prices hit $4,300 (£3,356) per tonne.

“The coffee supply chain is under immense pressure,” Lavazza stated, as reported by the Financial Times. “Coffee prices are not going down … [they’re] going to stay very high.”

Inflationary pressures have been intensified by poor harvest conditions in key production areas like Brazil, Vietnam, and Colombia, as well as shipping disruptions caused by the Middle East conflict, leading to 15-year high prices.

For UK consumers, the price of a 1kg bag of beans has increased by 15% over the past year, and Lavazza predicted a further rise of 20% to 25% in the coming year.

A flat white at the company’s café off Regent Street in central London now costs £3.50 for takeaway or £5.50 for dine-in, reflecting the current costs.

“We have faced very strong headwinds. I don’t see any reason why coffee prices will go down,” Lavazza said.

Despite this, the trend of UK consumers making fresh coffee at home, which started during the pandemic, remains strong.

In 2023, the company reported net profits of €68 million, down from €95 million in 2022.

Lavazza added, “People love it so much. And we think there’s an environmental element too, with people wanting to move away from using pods.

The UK retail coffee market is valued at £1.3 billion, experiencing a 3.9% annual growth, according to Nielsen data, largely driven by a 3.8% increase in prices.

Lavazza reported a 2.9% rise in sales volumes in 2023 compared to the previous year, equating to 32 million more cups of Lavazza coffee consumed over the past two years.

Coffee continues to be a daily essential for Britons, who consume 95 million cups each day.

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