INTHEBLACK July 2025 - Magazine - Page 46
F E AT U R E
“From a technical trading and coffee supply chain
perspective, we have had five years of supply deficit.
That has led us to where we are today.”
STEPHEN BANNISTER CPA, COFI-COM TRADING
China's Luckin Coffee,
founded in 2017, now
has over 20,000 stores.
No matter the price, importers have to
deliver to roasters, and roasters have
to deliver to retailers and cafes, who then
have to deliver to consumers. Those price
hikes must be passed on. Ultimately, the
consumer pays.
“BACKWARDATION”
When coffee economics is broken down
into demographic segments, Augello says,
the effects of increasing the cost of a cup
of coffee can be seen.
“Whether a cup of coffee is four, six or
eight dollars, we know this impacts people’s
weekly budgets,” he says.
The price of coffee throughout the market,
Bannister says, is highly challenging right now.
It has doubled in the last 12 months alone.
“We’re in a situation no one has
experienced before,” Bannister says. “From
a technical trading and coffee supply chain
perspective, we have had five years of supply
46 INTHEBLACK July 2025
deficit. That has led us to where we are today.”
In a market inversion known as
“backwardation”, prices of coffee on the
Coffee C futures market — the global
benchmark for Arabica prices — are
lower than current spot prices. This signals
immediate supply shortages, a report
by Coffee Intelligence explains.
Coffee majors such as Nestlé, Starbucks
and JDE Peet’s, which owns Moccona,
have affected supply for decades, Augello
says. They will sometimes enter a
coffee-producing region and buy all
the available stock.
But since 2017, there’s a new player from
China, Luckin Coffee, which has more than
20,000 stores.
In November 2024, Luckin Coffee
signed a 10 billion yuan coffee bean
purchase memorandum with ApexBrasil,
the Brazilian trade and investment
promotion agency.