For this edition of The 2nd Cappuccino I discuss why coffee prices are rising, how an ingenious marketing campaign changed coffee around the world, and why sustainability is more than just a buzzword – and how it affects the future of your coffee business.
Hello coffee lover,
You might have heard that prices for green coffee went sky high last week. For coffee growers who are currently selling their harvest, this was a time of incredible abundance.
For roasters and coffee shop owners, this is a time of shock and uncertainty.
Why did coffee prices shoot up? How long will the prices be high? Is this a good thing for the coffee industry?
Coffee prices rose because Brazil, the largest coffee-producing nation in the world, has faced some difficult times. Drought and cold weather have affected coffee crops this year.
Then, in late July a frost hit Minas Gerais. The mere threat of a frost in Brazil is enough to shake up coffee prices. And this frost certainly shook the coffee world.
Prices jumped by 25%. Market prices soared above US$2 a pound for the first time in 7 years.
This estimated billion-dollar loss for Brazil has created an odd abundance for some coffee growers. Some have rushed to sell their coffee to the highest payer NOW to take advantage of those prices.
Along the way, some have forgotten about their contracts. Obviously, this damages their long-term relationships with exporters, importers, and coffee companies.
How long will the prices be high? In the last few days we’ve seen the prices drop a bit. Today, August 2, the coffee price dropped to a lower $1.74.
The numbers fluctuate as the rumors about coffee in Brazil shift. So we can expect a lot of fluctuation over the next weeks and months.
How long will this uncertainty last? In Brazil, trees that were severely damaged by the frosts need to be pruned back. It takes 2 years for production to resume at the same levels.
So an estimated drop in the 2022 harvest for Brazil, which is anticipated at up to 10% lower production, can mean prices will be higher for some time.
If you are a roaster or coffee shop owner, you may be asking how you can balance out the ups and downs.
Not panicking is the first step. Be patient and see where the prices settle down.
Rather than purchasing for the long term, such as a year in advance, think in terms of shorter times like a few months. And you might need to consider raising prices for some of your coffees and letting your customers know about the changes in the coffee industry.
All this talk about coffee prices leads us to coffee sustainability.
What is coffee sustainability?
Let’s face it. Sustainability is a buzzword.
Everyone talks about sustainability. But how well do they understand sustainability? Often, not well at all.
But can sustainability affect your coffee business? Can it change how you buy coffee and who will buy your coffee?
In this article I explain what coffee sustainability involves and what it should mean to all of us. Read What is coffee sustainability?
How can coffee marketing change the world?
Back in the 1950s, a marketing campaign got started. The federation that put it into motion simply wanted to sell more coffee. But along the way they changed the world.
Read Who is Juan Valdez to see how this figure changed coffee consumption.
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See you next month and happy slurping!
