Brexit, inflation and coffee: what does the future hold?

It’s fair to say that the news at the moment is pretty bleak. A US president who seems hell bent on insulting every person or group he comes into contact with, a hefty divorce bill from the EU and a depressing economic outlook – at the moment, it feels that there is little to be positive about.

Inflation this week reached a six month high. At 2.7%, the highest it has been since March, the knock-on effect on people’s disposable income will be felt across the country. This will prove a particularly difficult time for some as we head into Christmas. The belt tightening has already begun, and this latest blow to the economy is likely to encourage UK consumers to adopt a more frugal attitude while we weather the storm.

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Small steps can make a big difference. Fans of the gingerbread latte will have more spare change left over for pigs in blankets if they opt to brew a mug at home instead of buying one on the go, for example. This is good news for coffee roasters, but not so much for coffee shops.

As Brexit looms ever closer, and with clarity around what that might look like virtually non-existent, I am often asked how a hard or no-deal Brexit will affect the coffee industry. The truth is, the impact will be less jarring for coffee roasters than their cafe owning counterparts, mainly because the price of beans will remain largely the same.

The majority of beans are imported from outside of Europe – our signature blend, for example, uses beans from Colombia, Brazil, Ethiopia and Indonesia. Although the market has been negatively impacted by 2016’s referendum result, for the most part, the price of a bag of beans is unlikely to fluctuate too much post-March 2019.

Brexit-related difficulties will be felt more keenly by coffee shops, many of whom count EU workers among some of their best baristas. How much of a problem Brexit will present them with is still yet to be determined, but the uncertainty has already led to many opting to leave the UK before it is. Many coffee shops will have a tougher job finding staff after the split comes into force.

In these difficult times, nothing is certain, but one thing that cannot be denied is the UK’s love affair with coffee: a staggering 95 million cups of coffee were consumed last year. Although a hike in the price of a Starbucks mocha is unlikely to result in fewer cups being consumed, it could well lead to an increase in people choosing to save some cash by making their own at home.

Furthermore, the boom in coffee related gadgets – such as the latte pro, which heats your milk to the perfect temperature while simultaneously frothing it – means that creating a perfect coffee shop coffee at home isn’t such a tall (sorry, Grande) ask. The so-called ‘latte levy’ and a general shift towards sustainability within the industry has resulted in a huge growth in the purchase of reusable cups, making that homemade brew even more appealing, particularly to commuters.

While every industry must brace itself for the impact of Brexit, coffee roasters actually just need to keep on doing what they are doing: making drinking coffee at home as good as it can possibly be – that way, even those pinching the pennies won’t have to bid adieu to their favourite beverage on a cold winter’s morning.

By Andrew Knight is the founder and CEO of luxury coffee roasters, Andronicas

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