x Abu Dhabi, UAEFriday 21 July 2017

Strong coffee price declines do not filter into UAE pockets

The global price of coffee beans might be heading down, but do not expect your morning cup to get cheaper any time soon.

Global coffee prices fell per cent in the past 12 months to $1.48 a pound last month from US$2.10 of the some month last year. Pawan Singh / The National
Global coffee prices fell per cent in the past 12 months to $1.48 a pound last month from US$2.10 of the some month last year. Pawan Singh / The National

The global price of coffee beans is tumbling but do not expect your morning cup to get cheaper any time soon.

Coffee shops across the UAE say a 30 per cent fall in global prices in the past 12 months, from US$2.10 a pound (Dh7.71) in August last year to $1.48 a pound last month, has yet to filter down to their prices after managing surging costs in the past few years.

"It's definitely not affected us," said Marwan Kandeel, the senior brand manager for Cravia, which manages Cinnabon and Seattle's Best Coffee in the UAE. "The coffee price is going up, it's a soft commodity as you know. The prices we are buying at have increased."

Both Cinnabon and Seattle's Best Coffee had to increase prices by Dh1 per cup last year and now offer four different sizes of cups compared with two previously, in order to manage rising costs.

But prices have been falling globally this year, according to the International Coffee Organisation, which monitors coffee bean costs.

Its composite indicator price, which tries to look at the price of green coffee of all major origins and type, fell 30 per cent between August last year and last month.

Coffee shop owners and suppliers say there are a number of different factors that determine their prices in the UAE, including a time lag between the prices of crops and the cost of cups.

"As far as I know, the price has not come down any significant degree," said David Rogers, the general manager for Dunkin' Donuts in the UAE. "It takes quite a while for it to work through the chain."

Coffee shops said they were also more reluctant to lower prices when the global price falls, because they were loath to raise prices in times of rising costs and lose customers, so they take a hit to profit margins at that point in time.

Coffee prices rose 120 per cent in the five years to the start of this year, according to the ICO.

In 2006, the average price for a pound of coffee was 95.75 US cents (Dh3.51).

Despite no signs of a fall in the price of a cup in the Emirates, home-grown roasters that both supply coffee and operate stores, say business is booming this year as the number of hotels in Abu Dhabi and Dubai grows and customers across the country go more upmarket in their coffee tastes.

Locally roasted coffee is often fresher than coffee that is bought by the big chains and shipped for weeks from overseas. Locally roasted coffee also tends to be more expensive than imported products.

"Customers are more educated now and looking for a fresher cup," said Kim Thompson, the founder of Raw Coffee, a roaster, supplier and coffee shop in Dubai. "Some of our customers are growing and adding the number of outlets, but we have also doubled our commercial customers this year."

Raw is now roasting four times the amount of coffee it was at the start of the year for clients such as the Lime Tree Cafe, Slices and Galleries Lafayette.

Justin Clarke, the founder and chief executive of Orbis Foods, another local roaster, said he has sold 80 per cent more so far this year, compared with the same period last year.

"This shift away from imported coffee, it has just gathered pace," he said.

Adam Beasley, director of food and beverage at the Westin Abu Dhabi, said his customers were becoming more conscious of the quality of coffee served in hotels.

"I agree there's a shift ... especially in Abu Dhabi with all the new five-star hotels opening," he said.

Dunkin' Donuts and Seattle's Best said sales were broadly flat so far this year in the UAE compared with last year.

rjones@thenational.ae