Rise in cost of Arabica may leave bitter taste for UAE’s coffee lovers
▶ Industry figures say only the most dedicated drinkers will be happy to pay more for a brew
The price of a cup of coffee could rise by as much as 20 per cent in six months, catering industry sources said.
Pressures on prices include a shortage of the Arabica bean, shipping restrictions caused by the coronavirus pandemic and an increase in the cost of shipping containers from South America and Central Asia.
Extreme weather in Brazil, the world’s largest producer of Arabica, is another factor in the supply crisis after frosts wiped out a third of the crop there.
Alan Hardman, marketing manager for Dubai company Coffee Planet, said the average cost of the Arabica bean had almost doubled over the past year from $1 a pound (0.45 kilograms) to $1.80 and that will hit consumers’ pockets.
“It is inevitable we are going to see an increase of between 10 per cent and 20 per cent for the consumer in the next six months,” said Mr Hardman, whose company roasts the equivalent of 25 million cups of coffee each month.
“I also think that increase will stick around for the next couple of years at least. There are concerns the price could go up as high as $4 a pound next year, which will unfortunately be passed on to the consumer.”
The Arabica bean is estimated to be used in 60 per cent of the coffee produced worldwide and is synonymous with speciality coffee – something the UAE market is renowned for.
The shortage resulted in some producers toying with the idea of turning to the Robusta bean, which is significantly cheaper than Arabica and commonly used in instant coffee.
However, Mr Hardman believes the market in the UAE will endure the price increase because of the popularity of Arabica coffee.
“People are not going to stop drinking coffee, as it has become a such a normal part of daily life across the globe and especially so in this region,” he said.
The coffee price increase comes as the industry tried to cope with the effects of the coronavirus pandemic.
“We saw about 40 per cent of the places we supplied close down and they have not reopened,” said Matt Toogood, owner of Dubai’s Raw Coffee Company, which supplies coffee to more than 350 companies in the UAE.
One of the trends to emerge during the pandemic was for making coffee at home, which has made consumers more knowledgeable.
This means coffee shops will have to improve their game, especially if prices are going to increase, Mr Toogood said.
“There is a temptation for companies to reduce the standard of their coffee but keep charging premium prices, which is what I am worried will happen in a lot of cases,” he said.
“However, many consumers have spent time working out what makes good coffee and have gone back to the chain stores and are now expecting a better quality. For a long time, companies have tried to hide bad coffee by using loads of sugar.”
He said the budget end of the market is going to feel the impact of price increases as smaller companies will not be able to absorb them.
“The bottom end of the market is going to be 100 per cent affected because they have no way of avoiding it,” Mr Toogood said.
“Your cup of chai from the guy on the back of his bicycle is going to double because his costs have doubled.”
There is one upside, according to Mr Toogood.
“The coffee producers are going to be making more money,” he said. “The biggest problem we have had in the coffee industry over the last 10 years is [that] the farmers have not been paid enough. “In most cases, they have been surviving on the poverty line.”
Sixty per cent of all coffee comes from smallholder farmers with fewer than five hectares of land – about 12.5 million people.
Non-profit group Enveritas, which works to promote sustainable coffee growing, estimates that at least 5.5 million of them live with an income below the international poverty line of $3.20 a day.
But the increase in price may not matter to coffee-lovers as long as they have their morning cup.
The owner of another Dubaibased coffee franchise believes many customers know exactly what they want and are willing to pay for it.
“The coffee connoisseurs have always been happy to pay that little more for the extra quality,” said Kaniz Samir-Mostaffa, co-founder of Blk Cab Coffee, which charges up to Dh35 a cup.
Pressure on prices began with a shortage of beans, then the coronavirus hit retailers, and producers also felt the pinch