Storm Brewing – Brits Face Price Hike On Favourite Drinks As Tea AND Coffee Experience Supply Problems

  • Coffee supply continues to struggle to meet demand, leading to a 4.9% year-on-year price increase in the coffee market
  • Droughts in Kenya have also heavily impacted tea supply
  • New research shows Brits spend £54m a week on hot beverages but worryingly for tea and coffee shops 65% wouldn’t spend over £2.99

British tea and coffee drinkers could be paying more for their daily cup very soon as supply problems continue to impact their availability.

The problems come as new research from Beacon reveals, that 65% of Britons would not be willing to pay more than £2.99 for a cup, which would impact tea and coffee shops across the country considering passing the increased trade cost to their customers.

The coffee market has seen a 4.9% year on year increase in pricing due to demand outstripping supply while droughts in Kenya have also heavily impacted the tea market, according to recent CGA data.

Paul Connelly, Beacon MD, commented: “The tea and coffee market has seen a lot of fluctuation recently, with weather conditions and the political climate having a major impact on price. The trend for drinks with an American and Australian influence has changed the hot drinks market completely, with consumers now spoilt for choice when they enter a coffee shop. From our research, we know that there continues to be huge demand for these speciality drinks, which is driving growth in the category, however it’s also placing strain on supply that inevitably leads to price increases. It’s hard to predict what this market will bring over the coming months, however with significant price increases on the horizon, it’s likely that coffee lovers may soon have to cut back on the caffeine if they want to cut back on the costs.”

Recent consumer research by Beacon highlighted the significance of the tea and coffee market among consumers in the UK. 75% of those surveyed said tea or coffee was their first drink of the day – compared to just 8% who opt for juice. Of those almost 40% said they would order a speciality tea or coffee at least once a week – with 7% purchasing them on a daily basis – equating to an estimated weekly spend of £53.9m across the UK.

Interestingly, 65% of drinkers said they wouldn’t be willing to pay over £2.99 for a speciality drink which, with the average price for a cup of coffee at Starbucks currently around £3, the price increase could leave drinkers much less caffeinated than usual.

Other findings from the research showed that when it comes to the drink order, whilst English breakfast continues to reign supreme, over a third of consumers prefer drinks such as flat white, herbal tea, cappuccino or latte, to a standard tea or coffee.

A recent report from Tetley also showed the importance of the tea market to the UK economy, with this category contributing around £3.4bn in out-of-home sales in 2016.

Figures based on estimated UK adult population: