Hey, folks! So here it is – a price rise announcement. It sucks, I know, and we don’t feel good about it, but in light of everything that’s happened over the past few months, it’s inevitable. As you’ll know, we do things that are tasty and convenient, and politics isn’t either of those things. That’s why we’ll try and stay as neutral as possible, but if you bear with us we’d like to explain why we’re having to increase the cost of your favourite (we hope) coffee. Let us talk you through it…
Firstly, you may have read back in October, shortly after Brexit, that the pound’s value plummeted to a six-year low against the euro. If, like us, currency markets don’t make much sense to you, don’t worry. Basically, a weaker Pound simply means that if you’re buying something in the UK in a foreign currency it will cost you more. Likewise, it also means that if you’re selling to say, France, you’ll make more money. The problem is that the Pound fell by almost 25% against the Euro. You may not know this, but our beautiful coffee is roasted and freeze dried in Germany by some very talented people which means that we buy our most expensive raw material in Euros. 25% increase in the cost of this isn’t good. Every morning we find ourselves checking the currency charts in hope that overnight the world would have sorted itself out and everything would start looking dandy again. But that hasn’t happened.
Secondly, all Arabica coffee is traded in US Dollars on what is called the “C” – a commodity market on Wall Street that all Arabica is traded through. That means that any change in value between the Pound and the Dollar will also hit us. Whaddya know? The Pound fell nearly 20% against the Dollar! Great. “The pound has lost almost a fifth of its value against the dollar since the referendum in June and is the worst performing currency in the world this year.” [Source: The Independent.]
Thirdly, the cost of coffee has been steadily increasing over the past year. There are lots of factors that affect the price of coffee. Sometimes it’s nothing more than market speculation. Sometimes it’s because of bad weather in a key growing region. The bottom line is that Arabica consumption is steadily increasing and supply is getting tighter. This has pushed the cost of coffee up about 25% from Oct 15 to Oct 16.
I know. This all sounds pretty grim, but before we get the violins out, we have some good news. We buy our coffee in big contracts that last us between 9 and 12 months. We also forward book our currency when prices are favourable. These factors mean that we essentially “hedge” our purchases to minimise risk, and level out the deep peaks and through. If we didn’t, we’d be looking at a price rise of around 75%! Despite that, the above three factors mean that the cost of our product has increased by 30% since this time last year, which equates to £0.25 per jar.
We do have to increase our prices, and we’ve absorbed a lot of the increase ourselves so that a jar of coffee stays affordable. On average, we’re keeping the rise below 10%.
Even huge companies like Unilever are suffering from the above factors. You may have heard about the dispute between Unilever and Tesco, after Tesco refused to raise prices by 10% for some of Unilever’s products. Unsurprisingly, it was Marmite which got the attention of the British public and in turn, Tesco stopped stocking Marmite on their shelves. It was here that #MarmiteGate was born. So, if Unilever, one of the biggest and most powerful brands in the world are struggling, then of course an independent family company from Devon (with far less buying power) are going to struggle too.
Although we don’t like to put our prices up for you guys, we’d much rather do that and ensure you still get the same great tasting, quality product that we are proud of. Never would we cut corners by buying cheaper beans that are easier to cultivate but don’t taste half as good. That pretty much goes against absolutely everything we stand for. We’re here to shake up the instant coffee market by providing something that will blow your mind and we know that cutting corners won’t do that. We buy the best quality coffee beans and the best quality ingredients to flavour the coffee. That costs a bit more, but we’re okay with that. And after all this, a jar of our coffee will still be cheaper than a coffee your average high street coffee shop.
Thanks for your understanding. #LivenUpYourCup