Judging Java: Inflation’s Effect on Coffee
February 23, 2022
Many people have pointed out that I have a tendency in this column to relate coffee to the effects of late stage capitalism. Rather than take time to get away from that mentality, I will instead be embracing it even more. Today, I’d like to talk about how recent economic developments have impacted the coffee industry, how you’re paying more per cup of coffee today than you were a year ago, and most importantly: why.
It’s no secret that inflation is a problem right now. In January, inflation in the United States increased to 7%, which is the highest it has been since February of 1982. A major contributor for this is the gasoline and oil industry raising prices, due to supply chain issues and oil companies wanting to make up for lost profits from throughout the pandemic. While the energy industry is the biggest contributor to inflation, there’s a different type of energy industry that’s been impacted .
The average cost of a cup of coffee has gone up significantly in the past several months. Most notably, Starbucks raised their prices in October of 2021, and then again a few months later in January. Starbucks CEO Kevin Johnson has even indicated that he expects to see those prices continue to rise throughout 2022, saying to investors: “we have additional pricing actions planned through the balance of this year, which play an important role to mitigate cost pressures, including inflation.”
Johnson also acknowledges something many people don’t think about or know about: there are other cost pressures within the industry. One of the most notable of these cost pressures is weather conditions in Brazil.
If you didn’t know, Brazil is the world’s largest supplier of coffee beans. Coffee requires relatively specific climates to grow, and Brazil happens to have relatively ideal conditions for growing coffee, at least usually. Unfortunately, they were hit with a severe drought last year, which reduced their coffee production ability, and then were hit by severe frost. This resulted in a substantially shorter harvest than usual, which has led to — you guessed it — costs going up. Even more unfortunate is that scientists have linked this weather to climate change, so there’s a pretty good chance that these issues will continue.
The ongoing pandemic certainly isn’t helping things either. First off, a major part of the current inflation issue is due to the pandemic. Secondly, where some industries saw a decrease in demand, especially during the early stages of the pandemic (for example, the travel industry took an obvious substantial hit in demand and is still recovering) demand for coffee hasn’t subsidized at all. On one hand, for coffee drinkers, that’s a good thing: the industry shows no signs of being stopped by the pandemic, meaning you’ll no doubt be able to get your morning fix no matter what.
On the other hand, this is a bad thing, especially for small, independent coffee shops. While companies like Starbucks can afford to hike up their prices and maintain their market share, many local shops can’t afford it.
It’s a complex situation, and I honestly don’t really know the answer for it. In the coming months, I’m sure a few local shops will unfortunately have to close their doors. I think it’s important right now to remember to support our local coffee shops.