The price of your morning coffee might get more expensive as the prices of coffee beans have increased by 10-12 per cent this year. As a result, coffee retailers are feeling the heat.
“There had been no increase in price but in the last GST Council meeting, the rates of caffeinated drinks such as coffee were increased to 28 per cent from 18 per cent. With poor crop production and price hike, it is difficult to contain the margins,” said a senior executive, Café Coffee Day (CCD).
Further, the coffee production in India has declined by 10 per cent between 2016 and 2018, according to Coffee Board of India. The board has pegged India’s total coffee production in 2018-19 at 3,19,500 tonnes, comprising 2,24,500 tonnes of robusta and 95,000 tonnes of arabica. The decline in robusta production is more than arabica this year, according to coffee growers.
“Coffee production is lower than last year, mainly driven by fall in production of robusta, which is used more in instant coffee. Currently, almost 70 per cent of the coffee output in the country is that of robusta while the rest is arabica that will certainly put pressure on coffee prices,” said an official, Coffee Board.
According to coffee retailers, till now they had been containing the prices as they have procured the stock in anticipation of lower production but going forward it will be difficult to contain the price. Those who consume instant coffee will be affected first, according to industry experts.
“While coffee prices have almost remained stagnant, hike is expected in the instant coffee category by January next year,” said a senior executive, Nestle India. Nescafe had been its one of the best performing products.