iTODAY: That cup of coffee is going to cost you more

From iTODAY:That cup of coffee is going to cost you more

Leong Wee Keat Dec 16, 2010 6:00

Coffee outlets set to raise prices as costs rise

SINGAPORE - Enjoying your cup of coffee at a neighbourhood store could cost more in the coming months, with prices of some brews going up by some 15 per cent.

Ya Kun Kaya Toast, which runs 37 outlets islandwide, will increase prices by 20 cents this month.

The chain last increased prices in February 2008 and described its latest price revision as "inevitable". "Operating costs and raw materials costs have been steadily increasing," said a Ya Kun spokesperson in response to MediaCorp's queries.

Meanwhile, chain-operator Killiney Kopitiam said raw material costs - including sugar and coffee powder - have seen "a significant increase of 60 per cent and above". But Killiney, which has 26 outlets, has no plans to raise coffee prices just yet.

High-end cafes Starbucks and Spinelli, too, are also keeping close tabs on soaring commodity prices, while maintaining their prices for now.

Global coffee bean prices rose sharply last month with the monthly average of a composite indicator hitting 173.90 US cents ($2.2866) per pound compared to 161.56 US cents in October, according to the International Coffee Organisation (ICO).

"This November monthly average was the highest recorded since May 1997," the ICO added in its monthly report.

Industry observers expect bean prices to continue rising in the coming months. They cited adverse weather conditions that have affected harvests in Indonesia, Vietnam, Colombia and some Central American countries.

Locally, rising utilities, rental and manpower costs have hit smaller retailers hard, said chairman of the Kheng Keow Coffee Merchants Restaurant and Bar-Owners Association Thomas Foo. He said some members have told him they are likely to increase prices. While the association does not set pricing guidelines for its 300 members, Mr Foo expects some to raise coffee prices by 10 to 20 cents before February's Chinese New Year.

But small retailers in heartland markets appeared wary of higher prices for fear of driving their customers away. "Increasing by even five cents is also troublesome as we will have to keep five cent coins for change," said one retailer.

Toa Payoh stallholder Richard Teo makes up for the rising costs by trying to sell more drinks. "But if our costs keep rising, increasing prices may be the only way for us to survive," said the 46-year-old.

Coffee drinkers appeared resigned to paying more for their daily cuppa. Insurance agent Dennis Lim might switch from drinking premium coffee at high-end joints to cheaper alternatives if prices go up steeply. "We don't have much choice. We need drinks to go with our food when eating out," said the 40-year-old.

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