x Abu Dhabi, UAEFriday 21 July 2017

Price of morning coffee to give more than a jolt

The price of a cup of coffee is set to rise in the Emirates as shops are hammered by rising prices globally. Watch video

Profits of coffee shops in the Emirates continue to be ground down by rising raw material prices. Silvia Razgova / The National
Profits of coffee shops in the Emirates continue to be ground down by rising raw material prices. Silvia Razgova / The National

The price of a morning pick-me-up is set to increase across the Emirates as the profits of coffee shops continue to be ground down by rising bean prices.

"It looks like in the next two quarters there will be a price increase because we cannot suffer these costs increases any more," said Caner Gursoy, the operations manager for Brook Foods, the franchisee for Gloria Jean's in the UAE.

Mr Gursoy said the price of Arabica beans had increased at a rate of about 16 per cent every six months for the past three years and that, reluctantly, some of this increase would now have to be passed on to customers.

The price of a basket of assorted coffee beans has risen 35 per cent in the past year, according to the International Coffee Organisation.

Coffee and beverage sales make up about 35 per cent of Dunkin' Donuts business in the UAE, and despite having the buying power of a global brand, its coffee costs have increased 50 per cent in the past two years, said David Rogers, the general manager for the chain in the UAE.

"We are considering a price rise," Mr Rogers said. "The last two years have been zero or negative growth, but the biggest problem is cost increases. It's really hurting."

Dunkin' Donuts has 60 outlets across the Emirates and has enjoyed 12 per cent growth in sales so far this year compared with the same period last year.

But this growth has not translated to profits and the company lost money in June, July and last month because of rising costs.

Both Cinnabon and Seattle's Best Coffee have already increased prices by Dh1 per cup and now offer four sizes of cups compared with two previously.

"With the increase in coffee bean prices, we are trying to offer smaller and bigger sizes so people can buy coffee and we can service all types of needs," said Marwan Kandeel, the senior brand manager for Cravia, which manages Cinnabon and Seattle's Best Coffee in the UAE. "Maybe you have to pay a little bit more or take a smaller coffee."

Mr Kandeel said the cost of the company's coffee beans had risen 80 per cent in the past year and 40 per cent in the past two months as suppliers raise prices.

Gloria Jean's, Dunkin' Donuts and Krispy Kremes all said they would not change their cup sizes to manage rising costs.

"I believe that changing the cup size and recipes is not being honest with the customer," Mr Gursoy said. "We do not want to go down that route."

Prices could start to improve soon though, with production of Arabica beans in Brazil, the world's largest coffee grower, forecast to increase 37 per cent next year.

rjones@thenational.ae