The coffee industry in New Zealand is bracing for turbulent times ahead, with unprecedented challenges threatening the very foundation of our beloved café culture. Richard Corney, the managing director of Flight Coffee and owner of The Hangar café, has sounded the alarm, warning that the sector is facing an uphill battle like never before.
A significant concern arises from the soaring coffee commodity prices, reminiscent of those last seen in the late 1970s. Corney highlighted the New York C price, steadily climbing over the past five years and now breaking records set in December. Compounded by a weaker New Zealand dollar, the industry is facing uncharted territory where survival will depend on adaptability and resilience.
The average green coffee price has skyrocketed from $3.76 per kilogram in 2020 to $13.97 in January 2024, marking a staggering increase that poses a severe threat to the margins of coffee roasters. Corney emphasized the inevitable impact on consumers, anticipating a 25 to 35 percent reduction in margin for roasters. This financial burden will ultimately trickle down to café owners, who will have to decide how much of the increased cost they can absorb.
Marisa Bidois, chief executive of the Restaurant Association, echoes these concerns, emphasizing the squeeze on hospitality businesses already struggling with rising costs. The rising price of coffee beans adds to the pressure on tight profit margins, forcing cafés to consider passing on the increased costs to customers or absorbing them to remain competitive. The delicate balance between quality, affordability, and sustainability is now more challenging than ever.
Brad Olsen, chief executive at Infometrics, sheds light on the global factors fueling this crisis. The Bank Commodity Price Index reveals a 63 percent increase in Arabia coffee prices in December 2024 compared to the previous year, a trend mirrored in the 61 percent rise in annual average coffee import prices between November 2019 and November 2024. Supply chain disruptions, adverse climate conditions, and currency fluctuations are driving these price hikes, posing a formidable challenge to the industry’s viability.
As coffee prices surge due to lower supply and higher demand, the resilience of cafés across New Zealand will be put to the test. The delicate dance between affordability and sustainability will require innovative solutions to navigate these uncertain times. Consumers are encouraged to support their local cafés, recognizing the tireless efforts of small businesses striving to weather the storm and deliver a quality coffee experience.
In conclusion, the challenges facing the coffee industry are not isolated incidents but part of a broader trend affecting businesses worldwide. The resilience and adaptability of café owners and roasters will be crucial in maintaining the vibrancy of New Zealand’s café culture in the face of unprecedented adversity. Let us raise our cups in solidarity with these unsung heroes behind our daily brew, recognizing the dedication and passion that go into each sip of that precious elixir.