Coffee cost rises as tea falls - but it's a different story in store

Beverage producers are likely to have been paying more for coffee and less for tea this year - but the reverse is true of Britain’s shoppers.

The commodity cost of tea from Kenya - which accounts for more than half the tea brought into the UK - has been falling since January and is now 20% lower than this time last year. Globally, tea prices continue to fall as ideal growing conditions help ensure good supply.

Lower costs have not yet affected retail prices - which often lag behind commodity changes - and the average price of tea in the big four is ­currently £28.54 a kilo, up 2.9% on six months ago. The increase is being driven by branded teas, with the typical price of a kilo of own label down slightly, from £18.49 to £18.56.

Some of the steepest rises have been in the burgeoning fruit & herbal and green tea ­sectors. These have seen a host of launches this year as brands look to tap into growing consumer interest - and offset a slump in sales of everyday black tea bags.

The average price of a kilo of green tea has risen 4.1% in the past six months to £50.52, while fruit & herbal teas are up 5.4% to £43.20. Own-label ranges have been more stable, with fruit & herbal up 0.9% and green tea down 0.4%.

The long-term decline in ­everyday tea bags is unlikely to have been helped by a 3.1% average price hike to £18.89, though the typical own-label price has dipped slightly to £10.64.

And coffee drinkers who opt for own label can make even bigger savings compared with six months ago, as the average kilo price has dropped 9.1% from £13.75 to £12.50. Again, the lag between the cost to producer and the retail price means this flies in the face of what is happening on the commodities market, where the cost of arabica has risen sharply in the past six months.

After three years of steady decline, the cost of beans has rocketed as a result of drought in major exporter Brazil and rising global demand for coffee - consumption in China, for example, is up 29% year on year according to analysts Mintec.

But, for the moment at least, Brits are paying less for much of their coffee, with the typical kilo price at the big four down from £22.37 to £22.01.

The biggest savings are to be found in own label, where the average kilo price has dropped 9.1% from £13.75 to £12.50. Own-label instant coffee has fallen 5.7% over the six-month period, compared with a 0.8% fall in branded lines, and own-label ground coffee is down 3.3% while branded ground coffee has risen 2.2%.