Why is the cost of your cup of coffee rising?

It's hard to escape news that the cost of living and prices are increasing so we decided to take a closer look at coffee.


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Coffee Time Blog

You think of an office and you think of employees hard at work or taking a break, and then you think of coffee. The caffeinated super drink is synonymous with productivity, motivation and high morale. For this very reason, many offices supply employees with coffee machines and the beans themselves, in order to keep work-based activity pulsing.

How are businesses to react, then, when faced with rising coffee costs?

First of all, why is it that the price of coffee is rising? Firstly, Brexit. Brexit is already having an impact on the cost of a broad range of imported goods, one of which is coffee beans. Coffee beans are bought and sold using the US dollar, and as the pound weakens in the wake of Brexit, at the new exchange rate the beans are costing businesses more than they used to. One speciality importer estimates a price increase of approximately 70p per kilo of beans, hiking the price up by around sixteen per cent.

Another element influencing the price of coffee is the increase to the National Living Wage, which was introduced in April 2016. This April it will jump up from £7.20 per hour to £7.50 per hour, costing businesses significantly and further increasing their overheads. In a poll of 800 businesses, 47% said their wage bill had increased and over a fifth of them said that the new National Living Wage regulations had cost them 'a lot'.

Finally, another change to legislation coming into effect in early 2017 is the Workplace Pension scheme. This new law means that all businesses large and small must now auto-enrol their staff in a qualifying pension scheme, and contribute towards them alongside their employees. Businesses have been being phased into the scheme since 2012, starting with the largest first, and now the deadline is in sight. This means only relatively recently have smaller businesses begun to feel the financial strain of these extra outlays.

Along with the higher costs of the National Living Wage, this could lead some employers to look for ways to save cash, and increasing the prices of kitchen consumables and coffee beans are likely to be one of the first places they identify.

However, it pays to think twice about this. Providing a quality office coffee service ensures great ROI as staff feel valued, enjoy their day's work more and are actually more productive when coffee is supplied for them. Having high quality coffee easily at their disposal means staff can relax, stop brainstorming about where they need to travel to pick up a latte, and focus on their work. It's the simple things that matter most of the time, and knowing they're able to pop to the kitchen and back to their desk without breaking the all important 'flow' of concentration means your business benefits massively.

In real value it's not all bad, as the increase works out at less than a penny a cup. A small price to pay?

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