Back to the topic of coffee.

First of all, I have to say that I was contacted by someone at AlShaya who’s opinion really does matter to me. That person pointed out that they have seen the post, which is a good thing in my opinion, and that they appreciate that this blog like others is a chance for them to see their consumer’s opinions. This person gave me some reasons for the increase in prices, which will be discussed below, but was also offended in the “daylight robbery” phrase.

Just to clear things out, here are two different websites (1, 2)that explain what “daylight robbery” means -

Here is an excerpt from the second one -

Meaning

Blatant and unfair overcharging.

Origin

This isn’t used to describe actual robberies - whatever time of day they might take place. It is a figurative phrase that associates an instance of unfair trading with actual robbery.

So I hope that clears that phrase out. Any readers from my blog know that I rarely offend or use offensive language.

Now back to the main topic, coffee. Since my last post, there have been changes, MANY changes!!

The first main change is that since then, I know for a fact that Caribou coffee raised their prices to be on par with Starbucks. I also know that Coffee Bean raised their prices in Dubai (not sure about Kuwait, and not sure about Second Cup or Costa either). So, in effect, the other stores could have just been waiting for Starbucks to do that so they can follow, since it is by far the dominant player in this market.

Secondly, and more significantly, Starbucks in the US also raised their prices as of October. Since my post was published on Sept 26th, there is an article 2 days later announcing the expected price increase, and another article here written in October about people’s reactions to the increase. Even though the price increase happened in Kuwait first and then the US, I still think that the margin is steep. In the US, the average increase is 3%, in Kuwait, it is more around the 15% average!!

Thirdly, from an article published last week on the Financial Times website, coffee prices have reached a 10-year high. Supply is getting lower from factors such as droughts in Brazil, while demand has been increasing in recent years! My favorite line in the article is -

Traders said the price direction would depend on Brazil’s rains. If the drought persisted, Arabica coffee might jump above $2 a pound. But if it rained, prices would drop towards $1 a pound.

This is probably a good explanation of why all these coffee shops have increased their prices, as well as brands such as Nescafe and Folgers coffee!

Fourthly, speaking of price increases, to make things worse, milk is going through the same price increase that coffee has been going through! There are several reasons for that. One article from ABC News points out the corn based ethanol which uses milk is one reason for the increased demand, while another article picks up on prices of feeding cattle, and more interestingly, demand from Asia!

All the previous reasons are good reasons for increasing prices of coffee worldwide, but why significant difference in price increase between Kuwait’s starbucks and the US chain??

One plausible reason might be that just like everything else here, the price of coffee had to go up regardless of the previously mentioned reasons. That it because of our inflation here. Inflation in Kuwait reached a 12-year high!

Another reason mentioned by the AlShaya representative that I have not considered is the ridicuous increase in real estate prices in Kuwait, which I have to admit is also a valid point. But it did make me wonder as to why did these reasons have to come to me because I wrote this post instead of being shared from the beginning with ther customers in general!?

Anyway, this post is very long, and it took alot of work and research to complete, so I’ll make that my excuse for lack of posts recently :P

But if there is one thing I really love about this topic, its how the price of the cup of coffee I get from the starbucks near work is directly linked to whether it rains in Brazil this summer or not, and to whether demand in Asia continues because of its growth, and whether the oil prices keeping going up which increases the demand for alternatives such as ethanol! Gotta love this world we live in! Globalization! :)