The competition in the coffee industry is fierce! There will be a new round of price increases!

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On October 5, according to media reports, South Koreans consume an average of 352 cups of coffee a year, nearly three times the global per capita consumption level. however, South Korean coffee beans are all dependent on imports, as prices rise and the Korean won continues to be weak. South Korean coffee companies are struggling to resist pressure and are brewing a new round of price increases.

It is reported that with the continued depreciation of the Korean won and rising costs, some coffee chains in South Korea have raised the prices of some of their coffee drinks by about 10%. In fact, the price of coffee in South Korea has gone up once in the first half of this year, so this price increase has aroused great concern among South Koreans.

In the first half of this year, the trend of price increases has already blown to South Korea, as Asia's per capita coffee consumption of the largest market, Koreans ushered in the most expensive moment of coffee. The price of international coffee beans climbed to a 10-year high, and Starbucks in South Korea, which had not increased its prices in the past eight years, could not sit still at that time, and a number of coffee brands led by Starbucks adjusted their prices in the South Korean market. The unit price of some Starbucks stores in South Korea will rise by about 2 yuan. Now there is a trend of price increase again. How should South Korea deal with it?

The price increase brought about by the reduction in the production of raw materials, as the reduction in the production of coffee beans in Brazil directly led to the rise in coffee prices, and natural disasters such as drought and frost led to serious problems in coffee production. The reduction in coffee bean production began to spread around the world; and then to the rising prices of the global supply chain, affected by inflation covering the United States. And affected by the rising labor costs and rent costs, more and more coffee companies began to face greater market pressure, and finally began to appear the trend of price increase.

The superposition of these triple pressures eventually led to increasing price pressure in the entire coffee market. At the beginning of this year, Starbucks, Tims and other coffee companies began to bear the original market pressure, so they began to raise market prices.

International coffee bean prices continue to rise, at the same time, the Korean won continues to weaken against the US dollar, aggravating the cost pressure on South Korean coffee companies. Today, in the Seoul foreign exchange market, the South Korean won against the US dollar is about 1430 won, continuing to fluctuate at a low level. The South Korean coffee industry says that if the exchange rate reaches 1500 won to the dollar, then costs will increase by about 10 per cent.

Since the outbreak, with the relief of mental stress and the surge in demand for takeout, the number of coffee shops in South Korea has increased rapidly. As of June this year, there were more than 90, 000 coffee and beverage shops in South Korea, an increase of 16% over the same period last year. The total number of stores is nearly twice the total number of convenience stores in the country, and the number of coffee and beverage shops in Seoul alone exceeds 25000.

In the Korean catering industry, the threshold of coffee and beverage shops is low, so the market competition is very fierce, and the closure rate is very high. A survey in Seoul shows that in the second quarter of this year, the suspension rate of coffee and beverage shops was higher than that of the entire catering industry, with less than 40% of shops that could operate for more than five years. At present, with high prices in South Korea, cost-effective coffee with a price of about 5 yuan in convenience stores is very popular, and the living space of coffee shops, which already bear the cost pressure of coffee raw materials and labor costs, has been squeezed again, prompting the industry to speed up the reshuffle.

In this context, the coffee market price increase also seems to be a helpless choice, but will consumers be willing to pay all the time? How to walk out of the characteristic road in the era of high prices has become a thinking topic for the whole coffee industry in South Korea.

Photo Source: Internet

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