There’s been a lot of chatter recently surrounding the possibility of having to pay £5 for a flat white – just how did we get here and what does it tell us about our world in general? asks Findlay Leask, MD of Caber Coffee.
Having been in the coffee industry for well over 20 years, I can still recall discussions with customers who were nervous of the impact on sales by even considering charging £2, or more, for a freshly made coffee. The fact that our industry is even discussing a fiver for a brew isn’t as shocking as it should be, even if it is the defining headline of our recent period of punitive inflation.
Everything is more expensive now. It feels like our weekly shop has doubled in cost, yet the cost of eating out hasn’t. Hospitality has had to be unbelievably creative over these last few years to maintain any sort of margin: you’re not paying £25 for a plate of fish and chips but that’s the sort of price that your favourite eatery should be charging to achieve pre-pandemic margins.
Speak to anyone in Scottish hospitality about the challenges the industry is facing, and everyone will give the same three answers in the same order: rates; energy costs; staff availability and costs.
Rates relief for hospitality is not being entertained by the Scottish Government but, south of the border, up to 75% off is promised. Energy is still brutally expensive especially for venues that need heat, light and power for kitchen equipment. The minimum wage has risen, and another increase is due shortly.
Findlay Leask, Managing Director of Caber Coffee
And then there’s coffee. As a commodity, traded much like oil in futures markets (large scale roasters buy coffee before the crop has even grown!), is susceptible to speculators, weather and other market fluctuations. To compound matters, Vietnam, which produces a huge proportion of the world’s robusta coffee, has decided to grow more profitable crops and is actively encouraging farmers to rip out coffee plantations. Brazil, whose coffee has been a market staple for as long as I can remember, has experienced a surge in national demand and we’re on the brink of the country no longer having spare coffee to export. The net result? Demand is outstripping supply, and the market price is at its highest point since 2011.
So, let’s say the coffee roaster has secured several containers worth of (green) coffee, and they need it quickly. We’re into sea-freight and logistics here (without mentioning any import issues) which are also massively expensive, and containers are arriving weeks late thanks to having to go “round the cape” to avoid the threat presently posed in the Red Sea access to the Suez Canal. That’s adding weeks on shipping times, not to mention the added costs of fuel and crew.
Overall, the supply chain really is weathering the perfect storm.
Finally, when the green coffee lands at a roastery the cost of the gas to turn it into the aromatic product we grind for our favourite hot drink, is still stratospheric. Once the distribution process takes it to your favourite coffee shop, they still need a machine running all day heating the water to brew your coffee, have the lights on, a trained barista serving you (I’m intentionally not mentioning the issues surrounding the price of milk!). Then, if you’re having your coffee “to go” there’s a cup and a lid – which surged in price during the pandemic when we all clamoured for single-use and have yet to return to anything like the price point of five years ago – and the coming threat of an environmental surcharge that will, effectively, force you to have your own reusable cup.
So, the next time we’re sitting enjoying a coffee we should remember its journey to our cup and instead ask: “how can they serve me such a lovely coffee for less than £5?”
To find out more, visit www.cabercoffee.com
email info@cabercoffee.com or call 0845 302 4600.