Coffee prices could soon fall. Here’s why

CTV News’ Allison Bamford explains why coffee drinkers could soon see a relief in prices at grocery stores in Canada, but not at cafes.

Relief may be brewing for Canada’s coffee industry grappling with the bitter effects of a global price surge.

Coffee prices have nearly doubled since 2020, largely driven by climate change and bad weather that has hurt crops in major coffee-producing countries.

Recent data from Statistics Canada shows the average retail price of coffee is up 30 per cent year over year.

But some experts suggest prices could improve later this year. Brazil, the world’s largest coffee producer, is forecasting a record crop this upcoming season.

Mike von Massow, food economist at the University of Guelph, says global coffee production is estimated to increase by four per cent.

“Over the next few months, we should start seeing some price relief in the coffee market,” he said.

Consumers will notice the biggest relief at the grocery store, according to von Massow, where sticker shock was most prominent.

“We’re probably not going to recover the whole 30 per cent, but I think we should see substantial decreases in the price of coffee at the grocery store,” he said.

Menu prices at coffee shops aren’t likely to change much, if at all, he said, since many stores opted to absorb the increased costs.

“While we may see some price adjustments in those environments, what this will largely do is allow (coffee shops) to recover some of their margins and perhaps improve their viability,” von Massow said.

Café Del Rey, a coffee shop in downtown Saskatoon, has tried to strike the perfect blend when it comes to managing the increasing costs of its main ingredient.

“We have tried to absorb some of those costs ourselves versus passing them onto the consumer,” said owner Devereaux Gatin.

It usually results in a 70/30 split, Gatin said, which means consumers have only seen a marginal increase in menu prices.

But in the last three years that the café has been in operation, Gatin says he’s seen significant cost increases in many of the essential ingredients, including milk, flour, sugar and cups. Often, the increases are associated with the packaging that the products come in, he said.

The effects of inflation are noticeably impacting consumer behaviour, according to Gatin.

“Our customers that would maybe come in four to five days a week have been a little bit more conscious with their efforts,” he said.

It can be a constant balancing act for the business as Gatin tries to manage operating costs without compromising quality.

But fluctuating coffee prices are just one piece of the puzzle.

“The forecast is good for us, but the challenges are always on their way,” he said.