Shoppers are paying more for coffee in the mults after major supplier Nestlé reportedly hiked supply-side prices to counter the weakness in sterling since the Brexit vote.
Nescafé prices are up 4% on average across 76 SKUs in the big four and Waitrose, with a 100g jar of Nescafé Original Instant Coffee 6% more expensive at an average of £2.92, while a 200g of Nescafé Black Gold is 12% more expensive at £6.89 on average [Brand View 52 w/e 1 February 2017].
Nescafé’s premium Azera brand of instant coffee is 3% more expensive on average following 33% price hikes on selected SKUs in some supermarkets.
According to The Sunday Times, Nestlé has demanded 14% price increases for its coffee from British supermarkets, based on the depreciation of the pound since the Brexit vote.
The supplier would not confirm or deny the report, saying only it was “used to dealing with all of the variables that could affect our cost pricing, including fluctuations in currency”.
“We constantly review those costs and we will continue to manage all of these factors within Nestlé with a view to making cost price increases only when absolutely necessary,” adds a spokeswoman.
“Retail pricing is at the sole discretion of the retailer and the final price the consumer pays for our products is set by individual retailers and we cannot comment on any changes they choose to make to increase or decrease their prices or when they choose to do so.”
It comes amid wider price increases in the coffee category, with average prices edging up 2% year on year across 646 SKUs in the mults following a steep increase since December.
Lavazza prices are 2% higher on average following increases in some supermarkets. A 250g bag of Lavazza Qualità Rossa Ground Coffee is now 40% more expensive in Morrisons at £3.53, while Sainsbury’s has hiked the price of a 250g bag of Lavazza Caffè Espresso Coffee 250g by 17% year on year to £4.10.
Own-label coffee is also slightly more expensive in the mults, with average prices 1% higher than this time last year. A jar of own-label Gold Roast instant coffee 200g is down 6% to £1.87 on average after Sainsbury’s slashed the SKU by 7% to £2.80. However, the retailer increased the price of a number of its premium own-label 227g bags of fresh coffee by 40% to £3.50.
Tesco and Asda have hiked the price of a 100g jar of own-label budget instant coffee granules by 38% and 43% respectively to 69p and 67p.
Wholesale prices for arabica coffee are up by almost 50% year on year to £2688/tonne, according to Mintec, while robusta prices are up by over 75% to £1790.4/tonne.
Aside from currency fluctuations, prices are rising due to predictions robusta production will fall 10% in 2016/17.
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