Richard Corney, Managing Director and Co-Founder of Flight Coffee in Wellington, highlights the unique challenges the Kiwi coffee scene faces amid record-breaking global coffee prices.
On 5 February, the price of Arabica coffee exceeded US$4 per pound on the New York futures market for the first time in history. Since August 2024, the price of green beans has been rising sharply due to concerns over global supplies following disappointing harvests in some major growing regions such as Brazil and Vietnam.
It’s a global issue, impacting coffee roasters all over the world, yet each country has its own compounding challenges. In New Zealand, the pricing crisis comes at a time when the hospitality industry is already struggling. Richard Corney, Managing Director and Co-Founder of roaster Flight Coffee, says a number of aligning factors have taken their toll on the sector.
“New Zealand’s COVID lag didn’t really finish until 2023. If 2022 was the hangover, 2023 was the headache. And then we had a change in government that absolutely gutted the public service system, making 6000 public servants redundant and removing half a billion dollars from the economy,” he says.
“The result of this and other factors, such as rising rents and staff wages, has seen our hospitality sector decline for the first time in 20 years. In 2024, we saw more cafés closing than opening, while in the roaster space there was a lot of consolidation.”
As the country grapples to overcome these issues, Richard believes the problem is about to be exacerbated by the skyrocketing price of coffee beans. As most coffee contracts are agreed around 12-months in advance of the receipt of the beans, the rising prices first seen in August 2024 will soon be felt by roasters and cafés.
“Being at the bottom of the world, New Zealand already faces unique challenges when sourcing coffee. We have increased shipping costs because the journey is that much farther. We’re also trading in an environment of only five million people and with a weak NZ dollar against the US dollar,” he says.
“And now, in the next few months, we’ll start to feel the impacts of these record coffee prices. One of the contracts I booked at the very end of 2024 was a price increase of 74 per cent compared to the previous year. We are not able to absorb these costs – they will have to be passed on to our customers, who will need to pass on the costs to their customers.”
This isn’t a problem only faced by Flight Coffee. Richard believes most of the country’s roasters will need to pass on these increases to their customers in order to remain afloat.
“We’re already seeing retail pricing of coffee going up on the supermarket shelves, so independent roasters and cafés are going to have to do the same,” he says.
“However, we’re part of a hospitality industry that’s been inherently undervalued for so long that roasters and café owners are scared to increase their prices. Over the past decade, nearly everything else consumers buy has gone up – such as fuel, rent, groceries, and even eating out – but the coffee industry has stayed stagnant. It’s more expensive than ever to own a café, yet owners aren’t passing on their increased outgoings.”
Richard says that Flight Coffee’s own Wellington venue, The Hangar Café, will raise the price of its small flat white from $6.10 to around $6.50 in the coming months.
“I understand the fear, but as an industry we need to put our big boy pants on and make a collective change in pricing. The current race-to-the-bottom that we have isn’t helping anyone,” he says.
With the next flowering in Brazil, the world’s largest coffee producer, not due until September 2025, Richard doesn’t believe there’s much chance of the tide turning on rising coffee prices until then.
Despite this, he says there is opportunity in the market, and for café businesses to weather this storm they’ll need to understand and communicate the value of their products.
“If you’re going to charge $7 for a coffee, you need to be able to tell your customer why it’s worth that amount. It’s the inherent value of your staff, your ambience, your food offering, and your physical space,” he says.
“You need to double down on what makes your business unique. If you’re selling coffee for $4.50 a cup, you’re undervaluing your product.”
Read more on coffee pricing and get tips for increasing your prices here.
