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Prospect of €5 lattes close as perfect storm sees prices soar

Prospect of €5 lattes close as perfect storm sees prices soar

Major coffee chains are hiking prices across the world as they battle to keep accounts in check amid surging costs.

Starbucks has announced plans to hike the retail price of its coffee offerings, while Pret a Manger raised eyebrows on Thursday as it said that it plans to hike the price of its coffee subscription service by 25% from March 16th.

So, what is responsible for the increase?

The easy answer is inflation, but essentially every element that goes into crafting a coffee has become more expensive over the last twelve months.

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The auction price of coffee beans has jumped since the start of the pandemic. However, this rise isn't strictly linked to lower production as a result of Covid-linked staff shortages. In reality, significant climate change influenced droughts in Brazil, the world's largest coffee bean producer, along with a once-in-a-decade frost have resulted in lower coffee yields.

Lower supply and high demand mean rallying auction prices that are up 40% on 2020.

The cost of producing the milk that goes into our coffee has also shot up. Higher energy costs have fueled price hikes for cattle feed and fertilizer, placing further pressure on dairy suppliers to increase retail prices.

Further squeezing the profits of coffee shops are increased packaging costs due to paper shortages, more expensive equipment (blame Brexit), rent hikes, and the aforementioned higher energy costs.

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The result?A latte price hurtling towards the €5 mark...

One thing that might make us feel a bit better about paying more for their Starbucks fix: A tall latte in Russia tops out at more than €11.50, while prices are generally over the €6-mark in Indonesia, Vietnam, Thailand, Malaysia, and China.

Photo by Chevanon Photography

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