One small espresso can tell us six stories.
Six Coffee Stories
1. An origin story:
The year was 1895 and the place, the Milan train station. Responding to rushed commuters’ desire to grab a coffee and run, a resourceful person invented the steam-powered coffee machine. Faster than existing technology, the machine created what (reputedly) was (appropriately) named the espresso.
2. A climate story:
Whether it’s the arabica beans grown in Brazil, Ethiopia, and Kenya, or robusta from Vietnam, the weather has constrained supply. Brazil is still reeling from its 2021 frost while Vietnam had a double whammy from a drought and then a typhoon. Now the threat of a “super” El Niño from a warming Pacific Ocean could again elevate prices.
3. A markets story:
With coffee futures universally available, farmers everywhere check prices. When the future looks rosier than now, they store their beans and create a self-fulfilling prophecy.
4. A trade wars story:
Vietnam and Brazil were two coffee growing countries that were hit hard by tariffs. Close to 50%, the tariffs reduced U.S. bean imports from Brazil (they switched to Germany) and increased what we wanted from Colombia. It was, though lose, lose. More demand for Colombian beans elevated those prices. As a result, all beans cost more.
5. A shipping story:
Houthi attacks in the red sea disrupted traditional shipping routes. Predictably, the detour made the trip more expensive.
6. A “K” demand story:
Echoing the “K” economy, the £5 espresso reflects the consumers that can pay a premium price for their espresso and the café experience.
Our Bottom Line: Supply and Demand
And finally, a graph completes our story. When we combine our supply side stories and consumer demand, equilibrium takes us to a 5-year price ascent.
My sources and more: Thanks again to the BBC’s World Business Report for an interesting story I wanted to share. From there, we went to the BBC article that had much more detail. We also returned to our past coffee posts, here, here. and here. Do take a look.
Nicole Byers is an entertainment enthusiast! Nicole is an entertainment journalist for the Maple Grove Report.
