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Speaker 1: We are being warned about something that's quite serious. Coffee

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Speaker 1: and the price that it might cost you soon very scary,

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Speaker 1: was in the headline for this story. Global supply chain disruptions,

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Speaker 1: climate conditions have affected production and they've been driving up costs.

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Speaker 1: So the average green coffee price has gone from three

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Speaker 1: dollars seventy six in twenty twenty to just shy of

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Speaker 1: fourteen dollars in January this year. Flight Coffee Company Managing

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Speaker 1: director Richard Corney is with me this afternoon. Richard, Good afternoon, Kyodo.

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Speaker 2: How are we doing well?

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Speaker 1: I'm anxious about this story. Actually, how much is how

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Speaker 1: much is the coffee going to? Are we going to

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Speaker 1: get to ten dollars this year?

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Speaker 2: It looks it's very possible. But at the end of

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Speaker 2: the day, the burn on passing on these costs I

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Speaker 2: was ultimately going to fall on the cafe owners and

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Speaker 2: operators and I I just have to clarify the price

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Speaker 2: that you referenced there is the in country commodity reference

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Speaker 2: price in New Zealand dollars before any other costs that

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Speaker 2: coffee roaster here in New Zealand might receive. So that

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Speaker 2: when that price moves as much as it has in

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Speaker 2: the last sort of well on average five years, it's

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Speaker 2: increased year on year because it's traded as a soft

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Speaker 2: commodity and New zeal And traded in US dollars when

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Speaker 2: it seems like the New Zealand dollar and other factors

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Speaker 2: such as that really ramp up the price for roasters

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Speaker 2: here and importers here in New Zealand. And what we're

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Speaker 2: seeing is an extended period of time in the market

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Speaker 2: where it's been growing months or months aggressively since August

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Speaker 2: last year, and coffee contracts that have been booked by

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Speaker 2: roasters and importers throughout twenty twenty four are essentially they're

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Speaker 2: going to be materializing this year on a week and

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Speaker 2: we're looking at some pretty significant reduction and growth margin

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Speaker 2: or operating profit for coffee roasters. And the fact of

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Speaker 2: the matter is they cannot afford to wear those costs

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Speaker 2: and they will need to pass them on, and when

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Speaker 2: they do, they'll pass them on to their wholesale business.

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Speaker 2: You'll set on the supermarket shelf bags of coffee getting

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Speaker 2: a bit more expensive. But essentially, you know, consumers are

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Speaker 2: the ones that are going to have to pay, and

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Speaker 2: they really, you know, should be prepared to do so.

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Speaker 1: How much extra are we going to have to pay?

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Speaker 1: I guess that depends on you know, who's got the

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Speaker 1: contracts and how much they're going to change by etc.

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Speaker 1: What is there a huge margin on coffee?

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Speaker 2: You know, to begin with well importers when they bring

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Speaker 2: in their coffee, bringing coffee on behalf of clients. Look,

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Speaker 2: because of the scale of the margin is tiny relatively speaking.

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Speaker 2: But coffee roasters and manufacture they're operating margins at a

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Speaker 2: healthy level are no different to any other sort of

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Speaker 2: manufacturing food manufacturer in New Zealand. And I think the

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Speaker 2: point is that that is the frightening part of this

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Speaker 2: is that you know, anywhere between presentially twenty five up

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Speaker 2: to thirty five percent of that margin is looking to

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Speaker 2: be eroded. It's the market continues to proceed the way

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Speaker 2: that it is. I mean, yesterday it breached its December

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Speaker 2: record for the highest price since nineteen seventy seven, and

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Speaker 2: it jumped twelve points and hit three dollars fifty seven

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Speaker 2: US dollars two pounds. That makes and if it gets

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Speaker 2: to four dollars a pound, that reference price I was

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Speaker 2: talking about would be almost sixteen dollars with the current

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Speaker 2: New Zealand exchange rate, and you know, for reference, that

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Speaker 2: was three dollars sixty or three dollars seventy five years ago.

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Speaker 1: So it's I mean, the price is creeping up, and

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Speaker 1: I can hear it in your voice. It is a

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Speaker 1: very scary prospect, especially when you say when you talk

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Speaker 1: about the exchange rate at the moment with the with

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Speaker 1: the United States. Richard, thank you for that. Richard Corney,

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Speaker 1: the Flight Coffee Company managing director, talking about the very

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Speaker 1: scary prospect, particularly I mean if you're in the business,

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Speaker 1: but also if you're buying coffee, the very scary prospect

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Speaker 1: of those increases coming through.

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