Coffee Prices

A Look at the Coffee Industry Horizon for 2015

A Look at the Coffee Industry Horizon for 2015With the arrival of November and the annual holiday season, consumers are looking at closing the books on 2014 and starting afresh in 2015. We are expecting some interesting changes in the coming year for the coffee industry. Some of those changes are expected, others will be a surprise. One thing will not change – America’s love of coffee in any form.

Americans are the largest consumers of coffee in the world. Coffee is our morning wake-up beverage, our fuel to get through the workday, and the beverage of choice for social gatherings. That will stay the same. However, there are changes on the horizon:

1. Coffee Prices

Coffee prices reached a nearly three-year high last month thanks, in part, to severe drought in Brazil that has taken out nearly 10% of the coffee crop. Brazilian government officials say next year’s crop could end up being weak as well. The news has pushed the price of coffee futures ever higher, which, in the end, results in higher prices at the retail level. Unfortunately, we will all be paying more next year for our favorite caffeine beverage.

2. Brewing Equipment

Throughout 2014, there has been a noticeable increase in the use of single cup brewers both at home and the office and a correlating decrease in the use of drip brewers. Surveys released over the summer suggest that trend will continue into 2015. People love single cup brewers because of the convenience and flavor choices; they are willing to pay more for both the equipment and coffee in order to make brewing as convenient as possible.

We expect the demand for single cup machines to continue rising in the office coffee industry, though not as quickly as the demand for them in homes. Companies paying for office coffee programs are less likely to absorb the extra cost of single cup brewing. We believe traditional drip brewers will remain strong for office coffee.  In fact we are seeing a resurgence in brewing pots of coffee in offices due mainly to taste preferences and sustainability issues.  Call us at 631-694-2688 to talk about this and Kitten Coffee, our new high-end coffee product.

3. Espresso Drinks

The National Coffee Association says the daily consumption of espresso drinks has risen from 13% to 18% over the last year. They expect that trend to continue and so do we. Espresso is the new, trendy coffee drink among those who use their choice of beverages to make a statement. The only question is how much consumers will be willing to pay if retail prices spike in response to demand.

The coffee industry horizon also looks favorable to flavored coffees, nontraditional creamers, and better pairings of coffee drinks and pastries for morning commuters. It does not look good for straight, non-flavored coffees and the neighborhood coffee shop. As far as coffee shops go, today’s coffee drinkers are more about drive-through and less about sit-down and long lines.

At Galaxie Coffee, we will continue watching the trends in order to provide the best possible service to our customers. We offer office coffee, bottled water, and a full range of juices and teas to customers throughout the New York area.

The Truth behind Rising Coffee Prices

The Truth behind Rising Coffee PricesIt is no secret that the price of coffee has risen considerably since the start of the year. In fact, spikes in retail prices are not all that unusual over the long-term. The fact is that coffee is affected by a number of different factors that cause price fluctuations on a regular basis.

Here at Galaxie Coffee, we want our customers to understand how coffee is priced. We believe that understanding what goes in the coffee prices will help alleviate some of the anxiety customers experience when prices rise. With that said, here is what you need to know about rising coffee prices:

Coffee Production

The single biggest factor determining the price of coffee is supply versus demand. As with anything else, if supply is reduced while demand remains constant or increases, prices go up. That is economics 101. Unfortunately, the two most recent spikes that occurred this past November and January are directly related to lost production.

Brazil is the single largest coffee producer in the world, accounting for roughly 40% of the commercial market. When things go well in Brazil, the coffee market is stable. The opposite is also true. Unfortunately, some parts of Brazil experienced their hottest weather on record in January. What’s more, the two areas responsible for the majority of Brazil’s coffee production have been hard hit by a sustained drought and unseasonably warm conditions.

Some experts say that as much as 30% of this year’s crop was lost due to the weather conditions. Such a steep drop affects prices in both the short and long terms.

Coffee Pricing

Coffee is considered a commodity on the open market, meaning it is sold by way of contracts that can be secured up to 12 months in advance. The nature of these contracts means that buyers must speculate on what they believe the price of coffee will be at the time the contract is fulfilled. Any change in supply has a definite impact on the price.

Practically speaking, contracts that were secured in late 2012 or 2013 could have been negatively impacted by the reduced production out of Brazil earlier this year. Until production resumes at normal levels, future pricing will also be affected. That is the nature of commodity exchange regardless of the particular product you are talking about.

Another part of coffee pricing is directly related to the costs of bringing it to market. For example, one of our biggest expenses at Galaxie is the fuel required to run our trucks. When gas prices surge, we feel the impact.  All the way up and down the production line there are costs built into the price the consumer pays at the market.

Despite recent price hikes for coffee, America’s most loved hot beverage continues to be one of the least expensive beverages per fluid ounce. It is our pleasure at Galaxie Coffee to provide our customers with some of the best coffees in the New York area.