Coffee chains in HK mull price hike due to supple chain disruption

Starbucks Hong Kong has reportedly increased price but other coffee chains have not yet followed suit. In a report from the South China Morning Post, Starbucks Hong Kong said it had considered several factors before raising the price of most handcrafted drinks by HK$2 a cup earlier this month. A very small number of beverages will have a slightly higher increase too. 

In a statement, Starbucks Hong Kong said it purchased coffee 12 to 18 months in advance to ensure adequate supply for its roasting plants and to reduce pricing volatility for customers as well as farmers. The company said, "we seek to minimise any price increases for our customers, but there are many factors that contribute to our pricing decisions, which we need to take into account. We value our customers’ loyalty highly, and we look for opportunities to provide meaningful value through benefits including the Starbucks rewards programme, special in-store promotions, competitive pricing and the elevated Starbucks experience.

The higher cost of coffee beans was partly because of the disrupted global supply chains and shipping, resulting in higher imported food prices. However, in the same report, poor harvests were also part of the reason for the increased cost of popular Arabica coffee beans as it has risen 45% globally so far this year. Robusta, another widely used bean, costs even more.

As for other coffee chains such as Pacific Coffee, SCMP cited a spokesperson from the company that contract prices for Arabica futures rose 18% in the past three months to the highest level since 2011 as crops in Brazil were devastated by dry spells and frost, adding that prices were on the rise as there was a knock-on effect to other countries such as Colombia and Indonesia, with overall global demand higher than forecast supply. The coffee chain said it was considering slight increase in prices as it has not raised its retail price since 2016, adding that the company was assessing the situation closely and reviewing its pricing strategy. 

Meanwhile, The Coffee Academics bore the extra costs although it has not increased the prices since 2019 despite the market being affected by the social unrest and then the pandemic. The report quoted founder and chairwoman of The Coffee Academics Jennifer Liu that the company had invested HK$4 million in a roastery in Tuen Mun last year, which was useful for storing beans from Ethiopia and Brazil and had guaranteed enough supply for up to 18 months.

The Coffee Academics roasted beans support its 20 cafes in Hong Kong and 18 in Southeast Asia, including in Singapore and Thailand. It also provides roasted beans to notable hotels such as the Mandarin Oriental in Central and Island Shangri-La in Admiralty. 

Although the prices of some coffee remain unchanged, prices of some speciality coffees would rise to about HK$100 a cup since The Coffee Academics would source some beans exclusively from Panama.

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