Dependence on political situation and dollar: if coffee will remain affordable drink for Russians
About coffee prices and factors that influence them
Coffee price in Russia has been rising for several years. According to the Russian Statistics Service, in March 2023, natural instant coffee increased by 8.17% over the year, natural ground coffee did by 14.73% whereas coffee in food outlets rose by 11.61%. As experts explained in a talk with Realnoe Vremya, several factors influence the price of the drink, and there isn’t a sudden price hike in the future. Read more in the newspaper’s report.
“Coffee is a very picky product”
Several factors influence the coffee price. As marketing manager of Botanika cafe Tatiana Chechyotkina told Realnoe Vremya, the logistics of the commodity directly depends on the political situation and harvest.
“The political situation in the world and harvest are the most important things the coffee price turns on. There are quite often political conflicts in coffee making countries. All this directly influences the sale and logistics of coffee. The more complex the logistics, the harder to get coffee, the higher the price grows. Also, there are natural phenomena: drought or, on the contrary, often heavy rains, insects. These countries have poor harvest too,” the expert explained.
According to Neft cafe’s Q grader manager Yegor Barinov, the pricing depends on other factors too:
“Here everything will depend not only on coffee prices at exchange but also on logistic terms. The coffee price consists of three key indicators: the coffee price at the exchange, logistics and dollar. In any case, the dollar remains one of the key parameters. Coffee seriously depends on the currency rate because coffee is not a high-margin product like, for instance, grain. All the slightest ups and downs strongly influence it.”
The Russian market depends on the feedstock because coffee beans can grow only in certain climate conditions. There are no production problems.
“We depend on the feedstock, there are no production problems. There are quite a lot of roasted product makers and their number increases year after year. Also, many brands on our market used to be mainly European. They exported coffee from here. Here there is direct dependence only on the feedstock. There is no possibility of replacing imports because coffee is a very picky product. It will be hard to grow even the most ordinary type in our climate on a big scale. It needs subtropics for some competition in taste and price. It can be grown in theory, but not on a big scale,” explained Yegor Barinov.
“There aren’t any serious ups and downs this year”
The experts surveyed by Realnoe Vremya don’t see a rise in coffee price soon in Russia. According to them, the price can fluctuate, however, this won’t be notable for consumers in the long term.
“The experience in the last five years shows that prices have gradually increased. The peak was during the pandemic, then in February 2022. Here it is because of the dollar. This year, it has to do with logistic moments. If everything moves in more or less same way, logistic issues will be cheapening. Everybody will simply be looking for ways. Everybody seems to be talking about the dollar that there is a tendency for a fall, this is why we can conclude that the coffee price will step by step fall,” thinks Yegor Barinov.
Tatiana Chechyotkina didn’t agree that the situation in the coffee market was stabilising. In her opinion, if there aren’t unpredicted critical situations, the tendency will stay till the end of the year:
“There aren’t any serious ups and downs this year unlike last year. This is why the price will likely be fluctuating but stay in normal brackets. If there are some exceptional circumstances, then, of course, we can expect more serious fluctuations. But everything is somewhat stable in the sphere at the moment. Perhaps, the stability will stay till the end of the year.”
Also, she forecasts restaurant and cafe businesses will be actively developing. This is linked to the exit of European companies that left room for Russian entrepreneurs from the Russian market.
“Quite many entrepreneurs continue developing the restaurant and cafe industry, and many establishments are opening. I think businesses will also develop this year,” the interlocutor of Realnoe Vremya stressed.
“A drip coffee boom”
Coffee consumption in Russia grows 5-7% a year, the experts claim. They paid attention to several tendencies that are characteristic of the recent years. It is high demand for coffee milk beverages and the popularisation of brewing accessories.
“If we are talking about Russian producers, milk coffee beverages still take the lead because mostly coffee roasted for espresso is purchased,” Tatiana Chechyotkina shared her observations. “The share of coffee roasted for filter is growing a bit. This means the culture of black coffee consumption is going up.”
According to Yegor Barinov, cappuccino is still the leader in restaurants. Consumers mostly prefer beans from Ethiopia, while instant coffee is in the greatest demand on grocery shelves.
Both interlocutors of the newspaper noted the growth in the popularity of gadgets and accessories to make the beverage themselves — Russians buy beans and gadgets more often.
“Also, there is a drip coffee boom in the market now, This year, this product has become extremely popular. For instance, drip coffee just started its journey several years ago, it was not so popular. Now drip coffee is big sales. This happens because after brewing coffee is like in cup brewing. This method is very simple, affordable, at the same time, the quality of the drink is very good. Also, one can take it wherever,” added the marketing manager of Botanika cafe.