SA's coffee industry in hot water: price surges explained by Domaine Rautenbach of Jacobs Coffee
With supply chain disruptions and climate change affecting coffee-growing regions, the industry faces unique pressures that impact pricing, sustainability, and quality.
Domaine Rautenbach, senior brand manager at Jacobs Coffee, unpacks some of these challenges and provides insights on how the global coffee trade is evolving and how it affects South Africa.
What are the primary factors contributing to the rising cost of coffee in South Africa? What impact do global coffee market trends have on South African prices?
Global supply chain disruptions, currency fluctuations, and rising production costs are key drivers of increasing coffee prices.
Additionally, climate change has severely impacted Arabica and Robusta yields, with extreme weather reducing supply and driving up costs. Climate change is significantly impacting green bean prices, making it the biggest contributor to the rise in coffee prices.
The adverse effects of climate change on coffee-growing regions, such as unpredictable weather patterns, droughts, and increased instances of pests and diseases are disrupting production and leads to higher costs.
Consequently, these challenges in the supply chain play a crucial role in shaping the pricing structure.
Following production, the coffee is carefully packaged, shipped, and warehoused locally, before being distributed to various retail channels for sale. Each step in this intricate supply chain incurs costs, from sourcing and transportation to production, packaging, and distribution.
When these costs are considered in tandem with the unwavering commitment to sustainability, the complexities behind the pricing structure become apparent - with production facilities strategically located in several regions as well.
What impact do global coffee market trends have on South African prices?
Currency exchange rates play a crucial role in determining coffee prices, as coffee is traded internationally.
When the local currency weakens against major trading currencies like the Euro, importing coffee becomes more expensive.
Additionally, fluctuations in global supply and demand for imported coffee beans have had a significant impact on coffee prices.
How are these rising costs affecting consumer behaviour and coffee consumption in South Africa?
Rising coffee prices are driving South African consumers to seek more affordable alternatives while maintaining their coffee rituals.
Instant coffee remains a popular choice due to its affordability and convenience, offering a budget-friendly solution for daily coffee drinkers.
At the same time, consumers are increasingly turning to specialty coffees and instant cappuccinos, which provide a high-quality specialty coffee at home without the premium price tag.
Additionally, coffee capsules and coffee beans are gaining traction as a cost-effective way to enjoy barista-style coffee at home, striking a balance between affordability and quality.
Will higher prices lead to reduced consumption, or will consumers seek out alternatives or locally produced options?
Higher coffee prices may lead to shifts in consumer behaviour rather than a straightforward decline in consumption. Some consumers might opt for smaller pack sizes or value packs, like Jacobs' seasonal offerings, to manage costs while still enjoying their preferred coffee.
Others may explore more affordable alternatives, such as locally produced coffee or private-label brands. Single-serve options provide a budget-friendly solution for households looking to control portion sizes and spending.
Additionally, as prices fluctuate, brands adapt through blend optimisation, ensuring consistent quality while managing costs. Ultimately, while some may reduce consumption, many are likely to seek flexible, cost-effective ways to continue enjoying their daily coffee.
Domaine Rautenbach, senior brand manager at Jacobs Coffee. Image supplied
What role do climate change and environmental factors play in the current situation?
Climate change and environmental factors play a significant role in shaping the coffee industry, impacting both production and pricing.
Unpredictable weather patterns, including prolonged droughts, heavy rains, and rising temperatures, are affecting coffee-growing regions worldwide. These conditions reduce crop yields, increase plant diseases, and disrupt harvesting cycles, leading to supply shortages and higher prices.
Additionally, extreme weather events can damage infrastructure and delay transportation, further driving up costs. Many farmers are adopting climate-resilient practices, such as shade-grown coffee, improved irrigation systems, and soil conservation techniques, to mitigate these risks.
However, the long-term impact of climate change remains a pressing challenge, influencing global coffee availability and pricing dynamics.
How is Jacobs navigating sustainable and ethical sourcing while maintaining quality and affordability?
Jacobs is deeply committed to sustainable and ethical sourcing, ensuring that premium coffee remains accessible while minimizing our environmental impact.
We are on track to sourcing 100% responsibly grown coffee by 2025, partnering with certified farms and promoting regenerative agricultural practices that enhance soil health and biodiversity. Through reforestation projects in key sourcing regions, we work alongside local communities to restore ecosystems and combat deforestation.
We have significantly reduced our environmental footprint by cutting down on packaging waste-saving 3,000 tons of glass annually by reducing the weight of our jars. Our goal is to transition to 100% recyclable or compostable packaging by 2030.
By using spent coffee grounds as fuel in our instant coffee factories and implementing energy-efficient production processes, we continuously reduce emissions and waste. Additionally, advanced water management systems help preserve water quality and support sustainable farming communities.
What does the future hold for the coffee market in South Africa if current trends continue?
Over the next five years, we expect to see continued growth in specialty coffee, with consumers demanding greater transparency and ethical sourcing from brands.
Sustainability will remain a significant trend, with businesses increasingly adopting eco-friendly practices, such as recyclable packaging and energy-efficient operations.
Ready-to-drink coffee and convenient, high-quality at-home brewing solutions will also expand. Additionally, technology, such as smart brewing equipment and mobile apps for ordering and customisation, will play a more prominent role.
Lastly, we may see more international collaborations and South Africa becoming a more prominent player in the global coffee community.
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