January 2020 - Secret Label and why coffee prices are rising
Date Posted:6 January 2020
“Bad things do happen in the world, like war, natural disasters, disease. But out of those situations always arise stories of ordinary people doing extraordinary things.” — Daryn Kagan
It's been a challenging period around the country over the last few weeks (or months for some areas) with fires and adverse weather conditions, so we are keeping it short this month as most of South Eastern Australia remains significantly impacted by extreme bushfires.
We have a brief note below on the impact of recent rises in the coffee trading index and it's our view this will affect Australian coffee consumers during 2020.
January's Secret Label is a bold cup of rich cocoa and sweet caramel - just lovely.
Big bodied with delicious fruit driven sweetness and a super-long finish.
It's a blend of 2 coffees that would rarely be paired - which of course makes it so much more fun.
January Secret Label
Our January 2020 Secret Label is now available for a limited time in 1kg packs of whole beans (default), or select your preferred grind setting to be ground from freshly roasted coffee beans (please ensure you select the grind before adding to the cart).
We have paired two very different coffees this month to create a nicely rounded and well balanced blend. Rarely would these coffees be joined, so we are pleased with the cup outcome.
There's a zesty fruit note in this coffee that's delicious and at times surprising - especially for fully washed high-grade arabicas.
The fruit-forward notes have a tropical and almost summer theme but it's the deep cocoa body and rounded salted caramel flavours that really give this coffee some shine.
Brown sugar, apple, soft florals, cocoa, caramel and praline with a deep body and long finish.
For a limited time only - finishing before the end of the month.
**** UPDATE 22/1/20 - SORRY, ALL SOLD OUT ****
Why coffee prices will rise in 2020
Major news from the world of coffee was the huge spike in the trading index for global coffee commodities during December - in the space of just over a week, the index jumped more than 30% - reaching a 3-year high.
The dramatic lift in raw coffee prices has seen trading terms adjusted almost instantly with spot pricing adding a hefty $1.20 per kilo premium to existing inventories.
For commodities like coffee, volatile swings in pricing are part of natural cycles, however, the recent history of price stability has caught many players off-guard, including us.
We are low on inventory having pushed out some decent volumes over the last 6 months and new futures are contracted on these more expensive terms.
Of course it's the same challenge faced by every other coffee company and it all depends upon where they are in a sourcing cycle, but inevitably everyone needs to go back to market within a season and the higher position of the index will affect every roaster's structures.
It's hard to know whether the spike in pricing has been driven from fundamental differentials in the tensions between supply and demand or whether it's profiteering by speculative fund traders.
There is also evidence of gamesmanship manipulating returns at origins, particularly the largest market player Brazil as they attempt to offset losses in lower exchange rates.
What it does mean is that pressure is now forming on the retail and consumption side for price rises.
It's our view that roasted coffee prices in Australia will rise in 2020 (except for the bottom end of the market where there is a lot of low-grade rubbish, affectionately known as "lost dogs"" clogging up supply lines).
It's also hard to imagine the trading index retreating having sat at relatively low levels for a longer than normal period.
As most of the larger input cost items (excluding raw coffees) have risen more than 20% over the last 2 years, selling prices have been flat or in a deflationary decline.
A situation whereby raw coffees move up in costs by around $1 - $1.50 per kilo will certainly contribute to broader support of a market price adjustment, especially in quality segments.