Coffee Prices Are Skyrocketing, Here’s What to Do

On April 25, 2014, the Financial Times reported that coffee prices had reached a “26-month high,” with bags of Arabica coffee costing an average of $2.09 per pound for wholesalers. The price hikes were due to droughts in Brazil (where much of the world’s Arabica is grown), and coffee growers warn that the bad weather is likely to affect next year’s coffee prices as well. Ouch.

As if higher prices weren’t bad enough, coffee experts are also predicting that the current supply will be unable to met demand…and that’s bad news for your business. Or is it? This article will explain coffee basics, and makes some recommendations about how your restaurant or bar can leverage the coffee price hikes to your advantage.

What’s Arabica coffee, anyway?

There are dozens of different types of coffee beans, but only two are cultivated for drinking: Arabica and Robusta. Arabica beans are tricky. They grow slowly and yield little, but they are sweeter and softer tasting, with all the delicious, subtle flavors you expect from “good” coffee. Arabica is usually used for espresso.

Robusta, the other type of coffee bean, has a harsher taste and contains two times the amount of caffeine. While they are considered inferior to Arabica beans, Robusta are easier to grow, with higher yields and faster maturation. Plain old coffee is usually made with Robusta.

How can my restaurant or bar use this info?

Because espresso-based drinks are going through an upheaval, your customers will have noticed their coffee prices are going up. If your waiters take the time to explain the coffee situation to your guests, and then recommend a delicious coffee-based drink to them “while they’re still available,” chances are that your customers will be interested enough to order a drink. To indulge their tastes, here are three coffee drinks you can mix up easily, no matter what your bar normally stocks.

1. Espresso Martini (courtesy of Kahlua.com)

1 ½ oz. Kahlua (or coffee liqueur)
1 oz. vodka
1 oz espresso

Combine all ingredients into a shaker filled with ice. Shake vigorously, and strain into a martini glass.

2. The Truffle (courtesy of Campari America)

1 oz. Frangelico (or hazelnut liqueur)
1 oz. vodka
¾ oz. cold espresso

Combine all ingredients into a shaker filled with ice. Shake vigorously, then strain into a glass.

3. The Wake Up Call (courtesy of New Amsterdam Vodka)

2 oz. vodka
1 oz. coffee
½ oz. triple sec
1 oz. milk
3 coffee beans for garnish (Arabica? Robusto? Your choice)

Combine all ingredients except the coffee beans into a shaker filled with ice. Shake vigorously, then strain into a glass. Garnish with three coffee beans.

No matter what you decide to do to promote coffee at your restaurant or bar, you will want to think carefully about your pricing. Because coffee prices are only expected to remain at a high rate, and because the low supply may cause prices to rise even higher in 2015, you should think about the role that coffee plays in your business. Don’t immediately increase the prices on your coffee—consider instead cutting out your “pot o’ coffee” option if you offer one, or increase the prices only on your espresso-based drinks.

Because supply is expected to fall short of demand soon, I predict that coffee drinks will increase in popularity, so you might want to integrate more espresso-based drinks into your menu, while also highlighting the bean’s scarcity and growing conditions on your menus or table tents. Whatever you choose to do, the way we all consider coffee will certainly go through a change, and everyone will have to “wake up” to the challenges that this delicious beverage now faces.

Photo licensed by Brian Legate