Large tea and coffee producers raise selling prices for retailers by 6-9%
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Large tea and coffee producers have been raising selling prices for retailers by 6-9% since September, citing a “difficult situation”. The cost of products of confectionery factories will also increase by 15%. These segments of the food market are most dependent on imports of raw materials, which, in addition to the devaluation of the ruble, are becoming more expensive due to a drop in the yield of cocoa beans and tea. Opportunities to raise prices for consumers living in saving mode are limited, therefore, experts say, retailers will have to negotiate with manufacturers to increase the share of promotions.
Kommersant received a letter in which the May tea and coffee manufacturer (Maisky, Lisma, Curtis, Richard, Coffesso brands) notifies retailers of an increase in selling prices by 6–9% from September 1. The company explains this by the recently observed high volatility of the ruble exchange rate, which has sharply increased the cost of importing raw materials. “We regard the situation as complicated,” May’s letter says. The company confirmed to Kommersant that the letter was sent, adding that the share of imported raw materials and materials in the cost exceeds 80%. They say that they will raise prices smoothly “to avoid a sharp jump.”
JDE (Jacobs, L`OR, Tassimo, Pickwick) also sent a similar notice to networks, also referring to the devaluation of the ruble. The company declined to comment. Orimi (Greenfield, Tess, Jardin) also warned about a 4–5% increase in prices for its products. The company says that this is “well below the rate of inflation.” Coffee producer Madeo also announced plans to smoothly increase selling prices to Kommersant.
Producers are also forced to raise prices for coffee due to a rise in prices in the world raw materials markets by about 20% since the beginning of 2023, JDE writes in a letter to retailers. As of August 8, the cost of futures for coffee beans on the New York Mercantile Exchange (NYMEX) was $1.65 thousand per ton, although the peak was in April this year, when the price reached $1.9 thousand per ton. Quotes for tea at NYMEX since the beginning of the year have grown by almost one and a half times, reaching $3.28 thousand per ton by August 8. The reason is the drought in Asian countries, as a result of which, according to the tea manufactory In Pursuit of Tea (USA), this season tea harvest has already decreased by 30-40% in India, and by 20% in China.
According to Ramaz Chanturia, General Director of the Roschaikofe Association, only 0.2% of the tea needs of the Russian Federation are covered by collection in the Krasnodar Territory. At the same time, according to him, 95% of imported tea and 75% of coffee are packaged in Russia.
Kommersant’s sources on the market say that stocks of coffee and tea grains purchased by producers at 75 rubles/$ are almost exhausted, which means that by winter their prices may rise by 20%. Wholesale prices will rise due to a sharp reduction in discounts for retailers by manufacturers, said Ramaz Chanturia, general director of the Roschaikofe association.
An increase in final prices for consumers always leads to a decrease in consumption, which is not in the interests of producers and networks, the expert believes. This can be avoided if, according to the director of Yakov & Partners Oleg Shenderyuk, the parties agree to expand the promo, whose share in coffee and tea sales now already exceeds 60%. In X5 Group, Magnit, Lenta, Azbuka Vkusa, Metro did not answer “Kommersant”.
At the same time, as the analysis of the Check Index service shows, in the second quarter, retail coffee bean sales decreased by 12% compared to January-March, with an average check growth of 30%, to 1.35 thousand rubles. per 1 kg, the demand for instant coffee decreased by 6%, the bill increased by 23%, to 368 rubles. for the bank. According to Sber Index analysts, consumer interest has shifted to tea, where sales in April-June grew by 6%, although the average bill grew by 5%, to 194 rubles. for a pack.
Confectionery companies have also warned about the increase in prices from September 1. This, for example, is stated in a letter from Kommersant to Lotte KF Rus (a subsidiary of the South Korean Lotte; brands Xylitol, Joo Chef`s, Chic Choc), sent to networks. Stork, a subsidiary of the German August Storck KG (brands Merci, Toffifee, Mamba), also notified retailers of a price increase of 5-16%. In these companies, they did not answer Kommersant’s questions. According to the estimates of the National Rating Agency, confectioners also have a high dependence on imports of raw materials – from 30% to 70% (see Kommersant of August 2). The problem was exacerbated by the decline due to drought in the collection of cocoa beans in West Africa, from where this raw material is imported.
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