Quality coffee is becoming less affordable for Russians

Prices rise mainly for Arabica

Bad news for domestic coffee lovers: in October, in annual terms, the popular drink has risen in price much more noticeably than other food products. According to the results of a study by the Evotor company, prices for ground coffee in chain stores jumped by 55%, for instant coffee – by 41%. There are a great many factors here, for example, crop failure in Brazil and Colombia due to adverse weather conditions. And the problem is that next year they will only intensify. Accordingly, the price tags will also increase.

According to the Ambassador of Colombia to the Russian Federation, Hector Arenas Neira, the yield in the most “coffee” regions will be reduced by more than half compared to 2021. At the same time, the production of Arabica, the main variety for the country, has fallen by 22% this year. Rising prices will also be spurred by a rise in the price of fertilizers and difficulties with logistics, including a shortage of containers for transporting coffee beans.

Meanwhile, the situation in Colombia is only a particular, and far from the most significant for the global market, if we consider the volumes. Brazil plays a key role, providing about 40% of world production, followed by Vietnam with 20%. The share of Colombia is about 8%, but there is a very important nuance: the country specializes in Arabica, and the Colombian factor alone affects the prices of this high-quality elite variety more than the world market as a whole.

In 2021, the largest suppliers of non-roasted coffee in Russia were Brazil and Vietnam: respectively, 37% and 32% of supplies, if calculated by the value of the goods. Colombia is in the top five exporters, with 5% of supplies. At the same time, the lion’s share of the final product is produced domestically, since coffee comes to the Russian Federation mainly in green beans and is further processed. Retail prices largely depend on the policy of retailers, who often set the highest possible margins. As for the assortment, this year it has noticeably decreased, although it remains quite extensive. According to NielsenIQ, since February, the average number of product items on the shelves has decreased by more than 20% due to the withdrawal of international coffee brands from the Russian market. Thus, the Swiss Nestle announced the termination of supplies of Nespresso, followed by the Italian Lavazza.

“The global coffee market is highly volatile, as it is critically dependent on weather conditions and crop prospects in producing countries,” says Nikita Maslennikov, a leading expert at the Center for Political Technologies. – In the spring, clear difficulties arose in Brazil, where the current crop was reduced due to last year’s severe frosts (and before that – droughts). This led to a serious price jump, and all over the world, not only in Russia. Now another similar story is brewing, this time connected with Colombia. Coffee is a commodity, like oil, which means that futures will rush up.”

And since the futures is a contract between the seller and the buyer for the delivery of goods after a specified period of time (for example, in two months) and at a predetermined price, coffee beans will come to Russia already more expensive. Even if the situation in the producing country has time to normalize, Maslennikov notes. According to him, the problem for Russia is as follows: for Arabica, which domestic retailers and consumers clearly prefer, world prices are growing faster, since it is a marker, reference variety, like Brent oil. And the Robusta variety, which is not very popular in the Russian Federation, practically does not rise in price.

“However, coffee is still not oil, quotes do not hit the entire population and economy, but only a specific category of consumers. If you want to drink, if you don’t want to drink, – the interlocutor of MK argues. – In the end, there are substitutes, you can switch to instant coffee, at worst, chicory. Of course, a real fan will buy at any price, but here the question of availability arises: some commodity items have disappeared from sale. As for retailers, they have their own logic: they strive to maintain the previous mass sales volumes. With the growth of purchase prices for raw materials, the winner is the one who begins to resort to all kinds of, moreover, absolutely legal manipulations. Let’s say he adds ground coffee to instant coffee. The average unsophisticated consumer is more willing to buy this blend because it is consumed much more slowly than the same volume of high-quality (and expensive) Arabica beans.”