Friday 18 August 2017

The New Cafe Society

Bean to cup: Rebecca McNamara serves customers in The Bear Market Coffee Shop in Blackrock. Photo: INM
Bean to cup: Rebecca McNamara serves customers in The Bear Market Coffee Shop in Blackrock. Photo: INM
Maeve Sheehan

Maeve Sheehan

It's not so much wake up and smell the coffee, more wake up to what you're paying for it.

A spike in the price of coffee beans worldwide last year is reverberating on cafe society in Ireland, causing price increases across the board from Americanos to frothy lattes.

The average price of cappuccinos and lattes here has risen 4pc to break the €3 mark, according to UK-based market researchers Allegra World Coffee Portal.

A Flat White will cost you €3 at Insomnia, compared to €2.80 six months ago. Starbucks hiked the price of an Americano from €2.50 to €2.70 but has cut the cost of a Flat White from €3.25 to €3, whereas the UK chain, Costa Coffee is now charging €3.30 for a Flat White and a medium Cappuccino €3.60.

Whether a coffee costs €3 or €3.60 appears to have had little effect on soaring sales, with experts predicting that the number of branded coffee shops will exceed 800 outlets and €600m turnover by 2021, compared with 632 this year.

The sales appear to be driven in part by independent coffee shops, shored up by millennials willing to pay a premium for their artisan brew of choice. At the independent coffee house and roasterie, 3FE, in Dublin's Grand Canal Dock, coffee prices start at around €3.50.

What they're typically paying for is so-called Third Wave coffee - which means it is sustainable, seasonal and traceable and preferable hand-roasted in an Irish micro-roasterie. If the beans have come out the rear end of a mammal, all the better (the Kopi Luwak bean plucked from the droppings of the Indonesian Civet sells for more than €500 a kilo - equating to €30 a cup and upwards in some specialist coffee house).

Allegra's research says that the bigger chains such as Insomnia, Costa Coffee, Starbucks and Caffe Nero will continue to dominate, but they face greater competition from smaller, artisan coffee outlets that have mushroomed in the capital and in provincial towns around Ireland.

The Euromonitor report for 2017, meanwhile, found that the number of independent specialist coffee shops grew by 8.5pc last year, cornering a market worth €17m. But customers tended to spend less while there - €5 on every transaction, compared with an average spend of €10 in the bigger outlets. Perhaps related to their following of millennials.

"While Ireland is not a coffee-drinking nation at heart, the "cafe society" is rapidly developing throughout urban and rural parts of the country," the Euromonitor report says, noting the "continuing consumer trend towards premiumisation and increasing demand for speciality coffee".

So is all this coffee inflation a sign of a recovering economy? According to Retail Excellence Ireland, the sector known as "hot beverages" is a great barometer of consumer confidence, footfall and employment.

The most recent figures show the sales of hot drinks were up by 5pc in the first three months of this year, one of the few retail areas to record an increase in sales.

"Essentially, increased coffee sales are an indicator that more people are back at work. Consumer trends inform us that people will pick up one en route to work or later in the day in order to beat the 3pm slump so that further corroborates the figures from the CSO regarding the numbers gainfully employed," said Lorraine Higgins, spokesperson for Retail Excellence Ireland.

We contacted four coffee outlets - Starbucks, Costa Coffee, Caffe Nero and Insomnia about price increases. Insomnia, the Irish-owned chain led by businessman, Bobby Kerr, was the only one to respond. It said it kept its price increases to between 0 and 6.9pc. "In the past four years during difficult economic challenges we have worked tirelessly to add value rather than increase prices. If this wasn't attainable our secondary goal was to keep increases to a minimum value."

Although the International Coffee Organisation reported that coffee prices fell sharply last month, it looks like the price increases at your local coffee house are here to stay.

Sunday Independent

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