Italian coffee giant Lavazza warns: Coffee prices will rise further!

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Italian coffee giant Lavazza has warned that coffee prices will rise further as climate change, transport disruptions and new EU regulations push up costs for roasters, the Financial Times reported Monday.

On the same day of the report, London Robusta Coffee Bean Futures (London robusta futures), the global benchmark, reached a high of 4844 US dollars per ton. The price has soared about 70 per cent in the past year due to poor harvests in Southeast Asian countries that mainly grow coffee.

Robusta coffee beans are widely used in the production of espresso and instant coffee at relatively low prices. Due to the sharp rise in prices, coffee-related companies are under pressure from increased costs. Giuseppe Lavazza, chairman of Lavazza Group, pointed out that the price of instant coffee on supermarket shelves in the UK has risen by about 15 per cent this year and is "likely to rise by nearly 10 per cent next year".

Coffee prices will not fall, but will remain at a very high level, putting a lot of pressure on the coffee supply chain, he said. In fact, coffee roasters such as Lavazza have been forced to raise prices and reduce profit margins as raw material costs soar.

And Giuseppe believes that the industry is used to dealing with fluctuations in the price of high-end Arabica coffee beans, but the recent surge in the price of cheap robusta coffee is unprecedented, causing a great impact and impact on the coffee industry, as well as more problems.

According to the report, according to the weather forecast, Vietnam's next season harvest will not be able to supplement the dwindling supply of Robusta coffee beans. Giuseppe also pointed out that climate change has mainly affected the world's most important producers of robusta coffee beans, such as Vietnam and Indonesia, greatly reducing the supply of robusta coffee beans. 、

"scarcity is precious", the decline in the supply of coffee beans has pushed up the price of raw materials, and hedge funds and other speculators have also flooded the market, so in Giuseppe's view, this has further pushed up futures prices.

In addition, the rise in freight rates is also a factor affecting skyrocketing prices. Since October last year, ships carrying coffee beans have been forced to detour to avoid attacks by Yemeni Houthi forces in the Red Sea, and more circuitous shipping routes for a company that buys coffee beans from Asian and East African countries will no doubt have to pay higher shipping costs.

In addition to the above two reasons, Giuseppe also believes that the EU regulations on the Import and Export of deforestation and waste-related Commodities, which will come into effect next year, will also lead to an overall rise in coffee prices. The regulation explicitly bans the import of coffee and six other commodities grown in deforested areas and will require food companies operating in the European Union to pinpoint the plots where their goods are produced.

According to Giuseppe, only 20 per cent of producers in the coffee industry comply with the new rules and are subject to the regulations, and European coffee roasters may be forced to buy all coffee beans from Brazil, the only country that meets the requirements. He said that if the contents of the new EU rules are not revised, once the current regulations are implemented, about 8 million coffee farmers will lose the opportunity to sell coffee.

Picture from: Internet

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