The coffee market remains in a bearish and foreboding mood
Gone are the recent hallucinatory NYC highs of + $3/ Lb
And we now have the reality of a record Brazilian crop and prices stubbornly chipping away at $1.70/Lb
Much lower and many farmers will start complaining they can’t make a profit and will start with holding stock…always a bit of an economic dichotomy me thinks…. but who I am to question the Keynesian, or otherwise, sentiment of the Brazilian grower cooperatives!
The simple fact is coffee prices are significantly lower than they were last year …in fact from the market peak prices are 40% lower
Now, true enough the price of coffee on the retail shelf is not simply about the cost of the raw material
There are the myriad costs to bring the ‘god given gift’ of green coffee from origin to Europe
To roast and pack and transport the product to a store near you… and in the main almost all of these costs have increased
But the reality remains that a price decrease is due….And you have guessed it – the last country in Europe in which this price drop will be recognised is the UK
The US has already witnessed some lower moves…but it was the news over the weekend of Tchibo’s ‘clean sweep’ 1€ / kilo retail price decrease which has really put the cat amongst the pigeon’s in the European trade
The German coffee market is the power house of the European coffee trade
It is at least four times bigger than the market here in Blighty, which was itself valued at a staggering £986m in 2010
The German market has grown constantly at 4.6% each and every year between 2005 > 2010 and the average German consumes 6.6 kilo of coffee pa….
Tchibo are probably the world’s No.4 roaster… They are a well respected business established in 1949 by the Herz family and have done a great job of keeping Kraft Jacobs in check in the German market place…
Tchibo remain a convincing No.1 with approximately 25% market share…closely followed by Aldi at +/- 25% and trailed by Kraft who range between low teens and early 20’s depending upon range activities which drive share
The price decrease is a bold and innovative move… Innovative you may ask…?
Well, yes it is, if only because it is honest!
Back in 2010 when prices were going up, Tchibo promised in above the line campaigns to reduce prices when the market allowed… and here we are in a drastically lower market and Tchibo are ‘doing the doing’!
This leaves Aldi with a tough act to follow if they are to maintain their lost leader positioning of being at least 50 € cent / kilo less than the brands… and leaves Kraft once again out in the competitive wilderness
Ah well… as we have debated before, Aromo coffee recently reviewed and lowered their prices and we may well do this again. Rest assured we aim to be honest and open with you dear reader and fellow ESE hard pod and espresso enthusiast… and so our quality and price promise remains constant and unerring