The impact of rising coffee prices on the UK hospitality and retail sectors
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With climate change continuing to disrupt coffee production and global shipping costs soaring due to geopolitical tensions, the UK coffee market is set to experience significant changes over the next 12 to 18 months, with rising coffee prices expected to influence both consumer behaviour and business strategies within the hospitality and retail sectors.
With higher costs across the coffee supply chain, the coffee category is bracing for several notable shifts. We anticipate consumer purchasing patterns evolving as price sensitivity increases. Shoppers are likely to become more selective, opting for premium or value brands depending on their individual preferences and budgets.
As price rises prompt a more discerning consumer, both premium and value coffee brands may see a surge in demand. While some consumers will seek the quality and exclusivity offered by premium brands, others may turn to value options in a bid to balance quality and affordability.
There could also be an increased focus on sustainability and ethical sourcing. Sustainability is becoming a priority for many consumers, and this trend will likely intensify as prices rise. Ethical sourcing and environmental responsibility will drive decisions at the point of purchase, prompting both retailers and suppliers to highlight their sustainable practices and certifications. As consumers look for ways to manage their budgets in the face of rising prices, smaller, more frequent coffee purchases are likely to become the norm. The rise of bulk buying may give way to more selective, on-demand coffee buying habits.
Promotions, loyalty programmes, and multi-buy offers may have an increasing role to play. Retailers and coffee suppliers will need to increase promotional efforts to maintain sales volume. Discounts, loyalty programmes, and multi-buy offers will become more prevalent as businesses strive to incentivise consumer spending and make higher prices more palatable.
While price increases bring challenges, though, they also present opportunities for innovation within the coffee industry. As consumers seek greater value, brands are likely to explore new ways to enhance the coffee experience. This will reinforce the role of eco-friendly coffee pods, including compostable options, which could meet the growing demand for sustainable and convenient alternatives. As environmental concerns continue to shape consumer behaviour, eco-conscious packaging will play an increasingly important role in driving purchasing decisions. We are likely to see more recyclable and biodegradable packaging to appeal to the growing cohort of environmentally aware consumers.
The next 12 to 18 months, will likely be a period of transformation for the UK coffee market. While rising prices present challenges, they also open the door for innovation and a renewed focus on sustainability. For both retailers and coffee suppliers, adapting to these changing dynamics will be crucial in maintaining consumer loyalty and continuing to drive sales. Staying ahead of consumer trends and finding new ways to add value will be key to success in a market increasingly shaped by both rising costs and a growing demand for ethical and sustainable practices.
Damon Wilson is UK commercial manager at Italian coffee brand Kimbo.
