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Supply issues set to hike tea and coffee prices

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Supply issues set to hike tea and coffee prices

Tea and coffee prices are set to rise as both sectors experience supply problems – but 65% of Brits would not be willing to pay more than £2.99 a cup.

This is according to research from purchasing company Beacon, which warns of the impact this could have on tea and coffee shops across the country considering passing the increased trade cost to their customers.

Coffee supply continues to struggle to meet demand, leading to a 4.9% year-on-year price increase in the coffee market, while droughts in Kenya have also heavily impacted tea supply, according to recent CGA data.

The survey found 75% said tea or coffee was their first drink of the day, compared to just 8% who opt for juice. Of those, almost 40% said they would order a speciality tea or coffee at least once a week – with 7% purchasing them on a daily basis – equating to an estimated weekly spend of £53.9m across the UK.

Some 65% of drinkers said they would not be willing to pay over £2.99 for a speciality drink – the average price for a cup of coffee at Starbucks is around £3.

Other findings from the research showed that, while English breakfast reigns supreme, over a third of consumers prefer drinks such as flat white, herbal tea, cappuccino or latte, to a standard tea or coffee.

A recent report from Tetley, also showed the importance of the tea market to the UK economy, with this category contributing around £3.4b in out-of-home sales in 2016.

Paul Connelly, Beacon managing director, said: “The tea and coffee market has seen a lot of fluctuation recently, with weather conditions and the political climate having a major impact on price. The trend for drinks with an American and Australian influence has changed the hot drinks market completely, with consumers now spoilt for choice when they enter a coffee shop.

“From our research, we know that there continues to be huge demand for these speciality drinks, which is driving growth in the category, however it’s also placing strain on supply that inevitably leads to price increases.”

Tetley’s launches first Tea Report >>

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