Coffee bean prices, which had briefly stabilized, are rising again. Abnormal weather in major coffee-producing countries has delayed harvests and tightened supply. With a weak won pushing up import costs, the prospect of further price increases across the coffee industry is growing.

According to food industry statistics from the Korea Agro-Fisheries and Food Trade Corporation (aT), the average international price of arabica beans in July stood at $7,301.41 per ton — up 23.2 percent from the previous month and 11.3 percent higher than a year ago.

Arabica prices had already surged last year as drought in Brazil, the world's largest producer, stoked supply fears. In November last year, prices hit $8,989.70 per ton — a two-year high and a 46.6 percent jump from the same period the year before. Prices then eased through June as supply normalized, but have climbed again this month.

Abnormal weather delaying harvests has been the direct driver of the supply shortage. Heavy rains have slowed harvesting operations in Brazil's main arabica-growing regions, disrupting distribution. "Harvests are being delayed in Brazil and elsewhere, and the resulting supply shortfall has sent prices sharply higher," an industry official said. "Prices are expected to stabilize once supply conditions improve, but even that is not certain."

Import prices have also continued to climb. According to Korea Customs Service trade statistics, the import price of coffee beans (caffeinated) reached 40,083 won ($28) per kilogram in June — up 19.6 percent from the same period last year. Import prices stood at 34,505 won per kilogram in February, then broke through the 40,000-won mark in May. The year-on-year increase has been in double digits for six consecutive months.

Instability in the Middle East has also driven up prices of packaging raw materials, including naphtha. According to raw material price data from the Ministry of Trade, Industry and Energy, the international price of naphtha stood at $968 per ton as of Tuesday — up 48.9 percent from the previous month and 80.3 percent above the level at the start of the year. "The cost of packaging materials such as plastic cups and straws is weighing on franchise owners," another industry official said.

Coffee chains have begun raising prices after holding off for some time. Franchise chain Mammoth Coffee will increase the prices of its iced Americano and iced decaf Americano by 200 won each starting Aug. 11. The small iced Americano will rise from 1,200 won to 1,400 won — a 16.7 percent increase — while the medium will go from 1,600 won to 1,800 won, a 12.5 percent rise.

Earlier, Mega MGC Coffee raised prices on three items in its "Hal Mega Coffee" lineup by 200 won each starting June 19. The Venti also raised prices on major menu items excluding Americanos by 100 to 500 won starting in May. Coffee Bean raised prices on its stick coffee products by up to 8.1 percent from June, and Ediya Coffee increased prices on in-store stick coffee and coffee mix products by 4.3 to 15.2 percent from May.

Price increases are expected to continue in the second half of the year. "We have been absorbing cost pressures internally, but the burden from the rising exchange rate and higher raw material prices is real," a coffee franchise official said. "If price competition among brands intensifies, it will inevitably weigh on long-term profitability."

A promotional sign for Americano prices is displayed at a Mammoth Coffee shop in Seoul. [Yonhap]
A promotional sign for Americano prices is displayed at a Mammoth Coffee shop in Seoul. [Yonhap]

korean@heraldcorp.com