Lower bean prices won't be passed on

KATIE CHAPMAN
Last updated 05:00 06/07/2012
James O'Connell-Cooper, marketing and brand manager at Mojo Coffee
MAARTEN HOLL/Fairfax NZ
NO GO: James O'Connell-Cooper, marketing and brand manager at Mojo Coffee, says 'overall the cost of providing coffee hasn't dropped'.

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Caffeine addicts who can't go without their daily double-shot flat white won't be seeing any price cuts, despite the cost of beans falling internationally.

Wellington coffee roasters have dismissed calls for the cost of a cup to be cut on the back of falling bean prices, saying any benefits are yet to be seen here.

And it turns out coffee connoisseurs in the capital might already be better off than latte lovers in Auckland.

Financial commentator Bernard Hickey says the cost of a flat white rose when bean prices went up, so now it should be dropping.

Internationally, since hitting a record high in April last year, the price of coffee has fallen by 37 per cent to US$3.203 per kilogram last month.

Those prices, combined with a strong kiwi and falling milk prices meant the cost of making a cup of coffee was getting cheaper – but consumers were not reaping any of the benefits, Mr Hickey said.

People should be questioning prices at the counter, he said, though he admitted that suggestion may be "a little cheeky".

"We're very reluctant in New Zealand to haggle, especially over something as basic as coffee."

But Mojo Coffee marketing and brand manager James O'Connell-Cooper said the global drop in coffee prices had little impact on the price of a cup in Wellington and it was "naive" to suggest prices could fall.

The prices had dropped from a 35-year peak, but were still high compared with a few years ago, he said.

Plus, a lot of the price benefits disappeared when higher-quality beans were sourced, and the long shipping distance to New Zealand added further costs, he said.

"We're not really seeing any significant savings across the board ... overall the cost of providing coffee hasn't dropped."

Mojo raised the price of a cup of coffee from $3.90 to $4 last year, but that had also been to accommodate GST changes, he said.

Wellington prices were also a lot cheaper than Auckland, which were often up to $4.40, he said. "We're getting double shots, so you're getting twice the coffee for less."

A double shot was a standard serve in Wellington, whereas Aucklanders would specify and be charged extra for a double.

That would not be well received in Wellington, where customers had a "distinct coffee palate. We wouldn't dream of serving single-serve coffee."

Havana Coffee importer Geoff Marsland said they had not benefited from the lower prices. Most roasteries in New Zealand would have bought stock when prices were high, and would be buying again later in the year when prices were expected to rise again.

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The international prices also reflected lower-end products, he said. "We're all buying high-end coffee ... I haven't bought any coffee at the low price."

COST OF A BUZZ

The price of beans:

2002: US$0.9403 per kg

April 2011: US$5.0870 per kg – record high price

June 2012: US$3.1968 per kg

Source: International Coffee Organisation

The average price of a 100g bag of instant coffee:

April 2011: $5.96

April 2012: $5.69

Source: Statistics New Zealand

- © Fairfax NZ News

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