There are plenty of economic, political and environmental explanations for why certain food items are more expensive these days.
But first, coffee.
No, actually. This consumer food price story is about coffee.
Canadians might have felt jolted by news this week that restaurant chain Tim Hortons is raising its coffee prices for the first time in three years. In a media statement emailed to CBC News, the company confirmed it was adjusting its price by “about three cents per cup.”
“This is significantly below inflation,” the statement added. “Our approach to pricing in our restaurants does not reflect any single event, but rather is designed to stay roughly in line with inflation over time, while maintaining great value and everyday low prices.”
Paying a few more cents for a double-double might not seem like a considerable change to most consumers, but Tim Hortons is just the latest example of coffee price increases plaguing global markets. And some food economics experts say the overall price hikes from coffee shops to grocery stores have the potential to change our coffee-drinking habits, even if only slightly.
“I can’t imagine, given the national addiction to coffee and caffeine, that people will stop drinking coffee altogether,” said Michael von Massow, a food agriculture professor at the University of Guelph in Ontario.
“But I think there is a risk that we see a decrease in consumption.”
Coffee is certainly not as affordable as it used to be, said William Huggins, assistant business economics professor at McMaster University in Hamilton. And Tim Hortons raising the price by a few cents isn’t unreasonable, he added.
“It’s just that it’s the kind of thing people notice,” he said. “And some segments are going to feel it more than others.”
Mike von Massow, a professor of food agriculture and resource economics at the University of Guelph, says the news that Tim Hortons is raising its coffee prices by about three cents a cup may reduce consumption somewhat but that it will take more than a small price hike to get most Canadians to give up a daily staple that is not so easily replaced.
Coffee prices skyrocket
Coffee prices have been skyrocketing for months. Earlier this year, global prices hit record highs due to supply issues in major producing countries such as Brazil and Vietnam. At the same time, U.S. tariffs on goods from Brazil have upended the global coffee market, pushing prices upwards.
Canadians paid 27.9 per cent more for their coffee at the grocery store in August than they did a year earlier, according to Statistics Canada’s consumer price index, which tracks inflation. Grocery prices in general increased 3.5 per cent year over year in August, while the CPI itself rose 1.9 per cent.
Statistics Canada’s retail data showed the average monthly price of 340 grams of roasted or ground coffee has shot up 34 per cent since January alone.
While most of Canada’s unroasted coffee imports come from Colombia, Honduras and Brazil, Canada imports most of its roasted coffee from the U.S., the agency noted, adding, “Roasted coffee products are among those affected by tariffs charged by the United States on its own coffee imports.”
In recent months, some coffee brands such as Keurig and Folgers have increased their prices.
In its most recent food inflation report released Sept. 30, grocery giant Loblaw reported a 40.9 per cent year-over-year price increase on the publicly traded cost of raw coffee, noting that the U.S.’s 50 per cent tariffs on Brazilian products have disrupted trade flows.
“At the same time, Brazilian producers are holding onto their beans and taking a more cautious approach to selling, which is tightening available supply,” Loblaw said in its report.
Arabica coffee futures are currently hovering near their highest level since mid-September, according to the Trading Economics website.
“Overall, it’s been a really challenging period for coffee growers,” Huggins said.
Coffee is highly susceptible to small changes in climate, and as coffee-growing regions get warmer, they’ve been having a decrease in yield, explained von Massow.
“Coffee, along with chocolate, are really the canary in the coalmine for climate change,” he said. “And that’s Economics 101. As supply goes down, price goes up.”
‘Getting out of hand’
On social media, many consumers have noted the rising prices for a cup of joe.
Some Reddit users lament what they say is a doubling of the cost for Kirkland brand coffee at Costco, or $21 for a tin of Nabob in the grocery store,with even no-name brands becoming “unaffordable.”
“The price of coffee is getting out of hand. I’ve been thinking about quitting drinking it all together,” wrote someone on the Canada subreddit Sunday.
“Coffee is now one of the [reasons] I go to the office, where it’s free,” wrote someone recently on a Montreal forum.
But von Massow says even though people may hit the drive-through less often, Canadians will continue to drink coffee daily. And that’s partly because unlike some other goods, there’s really not much of an alternative for coffee lovers.
“If I’m drinking orange juice, for instance, and it’s tariffed, I can switch to apple juice, or to reconstituted orange juice that’s made here in Canada.”
“With coffee, it’s much harder to say what I’m going to switch to.”
Information Radio – MB7:41Why Your Coffee Could Soon Cost More
U.S. President Donald Trump is threatening steep new tariffs on Brazilian imports including coffee. Sylvain Charlebois, professor and director of the Agri-Food Analytics Lab at Dalhousie University, speaks with guest host Faith Fundal about how this could impact coffee prices for Manitoban shoppers and local roasters.
