In the era of high prices, the rise in international coffee bean prices has led to the phenomenon of 'coffee inflation.' Prices for various types of coffee, from franchise coffee shops to instant mix coffee products, have increased significantly. As consumer psychology favors low-priced coffee, a competition for cost-effective coffee is intensifying, particularly among convenience stores and low-cost coffee brands.

Graphic=Son Min-kyun

◇International coffee bean prices surge... prices for cafes and mix coffee increase significantly

According to data from the Food Industry Statistics Information on the 2nd, the price of Arabica coffee in the ICE New York futures market, an international standard, was recorded at $7,549.65 per ton as of the 30th of last month (local time), approximately 10.36 million won. This reflects a 4.77% increase compared to the beginning of the year and an 80.15% increase compared to the same period last year. The price of Robusta coffee also rose by 33.58% compared to the same period last year, priced at $4,510 per ton (about 619,000 won) as of the 30th of last month.

A coffee industry official noted, "Since last year, abnormal weather, such as drought and heavy rain, in Brazil and Vietnam, the world's largest coffee producers, has caused production to plummet, leading to a surge in prices. In a situation where beans are imported, exchange rates have also risen. With increased manufacturing and distribution expenses, all places handling coffee beans have raised their prices."

Recently, the prices of coffee from franchises and instant coffee products have risen. Angel-in-us, operated by Lotte GRS, raised prices on some menu items by 200 to 300 won starting on the 29th of last month, while Toujours, run by CJ Foodville, raised prices by 100 to 500 won on 32 types of coffee starting on the 30th. Dongseo Food also increased the factory prices of coffee products including Maxim and Kanu by an average of 7.7% as of the 30th of last month.

As coffee bean prices rise sharply, the food and beverage and franchise industries continue to increase prices due to cost burdens. According to the industry, Dongseo Foods raises the shipping prices of instant coffee, coffee mix, and coffee beverages by an average of 7.7% as of the 30th of last month. This follows a price increase for major products like Maxim and Kanu in November of last year, marking a 6-month interval. The photo shows coffee beans displayed in a large mart in Seoul on the 25th of last month. /Courtesy of News1

◇Convenience stores emphasize competitive pricing in the 1000 won range and high accessibility

As the coffee industry has begun to raise prices consecutively, convenience stores are solidifying their image as cost-effective coffee retailers. Currently, the price of coffee at the four convenience stores (GS25, CU, 7-Eleven, Emart24) is in the 1000 won range. They have launched large-sized products based on existing prices or changed their private brand (PB) beans to enhance quality while keeping prices within the 1000 won range.

GS25 discontinued the medium size of its PB (private brand) Cafe 25 iced Americano and now only sells large (L) and extra-large (XL) sizes. The price remains the same as the medium size at 1,800 won. Americano is sold for 1,000 won. From March to May, the total number of visitors to Cafe 25 increased by 80.1% compared to the same period last year, and sales also grew by 20% during the same timeframe.

CU changed its PB, get coffee, in April and raised some prices. Previously, both the large iced Americano and the extra-large iced Americano were sold for 990 won, but after switching to high-quality beans, they are now priced at 1,000 won and 1,300 won, respectively. Seven Eleven and Emart24, which had increased PB prices by 100 won at the beginning of the year, are currently maintaining Americano prices at 1,200 won and 1,400 won, respectively.

A convenience store industry official said, "Convenience stores sell a wider variety of products than low-cost coffee franchises, so their sensitivity to changes in bean prices is relatively low. In an era of high prices, the price competitiveness in the 1000 won range and high customer accessibility due to many stores will be attractive factors for consumers."

Customers examine coffee beans at a coffee specialty shop in Seoul. The photo is unrelated to the article's content. /Courtesy of News1

◇Low-cost coffee franchises accelerate expansion

Low-cost coffee brands appear to be countering consumer demand for cost-effective coffee offered by convenience stores with aggressive expansion strategies. Currently, low-cost coffee brands have undergone one price increase and are maintaining an average price range of 2,000 to 3,000 won. The total number of stores for five representative low-cost coffee brands (Mega MGC Coffee, Compose Coffee, The Venti, Mammoth Coffee, and Paik's Coffee) reached over 10,600 as of last month.

An official from the low-cost coffee industry stated, "Some prices have been raised since we cannot absorb the cost of beans, but it is expected that, in the context of high inflation, consumers will seek low-cost coffee more than premium coffee. We are also considering increasing the number of stores nationwide, including takeout specialty shops, to enhance consumer accessibility while emphasizing that our coffee is a cost-effective alternative to convenience stores' 1,000 won offerings."

According to market research firm Euromonitor, the annual coffee consumption per person in Korea is 405 cups, averaging 1.1 cups of coffee consumed daily. The market size of coffee shops is approximately 8.5661 trillion won.

Se Yong-gu, a professor at Sookmyung Women's University, said, "In this era of high prices, it seems that more companies specializing in low-cost coffee will emerge to secure a solid foothold in the cost-effective coffee market, and coffee shops that lead in price disruption, similar to Daiso in the cost-effective market, will also emerge."