Armenian Consumers Face New Price Hikes as Coffee and Cocoa Prices Hit Records

Coffee and chocolate prices in Armenia are expected to rise significantly in the near future. This prediction was made by Raffi Mkchyan, president of the Armenian Exporters Association and a businessman involved in coffee sales, in an interview with Sputnik Armenia.

He noted that the rise in coffee and cocoa prices began globally around March-April. Armenian businesses are currently trying to keep prices as low as possible since they are still selling stocks acquired from last year’s harvest. However, it will not be possible to maintain this stability for long.

“The importer is afraid to sell their products cheaply because they will have to purchase the next batch at a higher price and worry that the funds may not be enough. Therefore, before purchasing the next batch, they will already have to increase the price of the existing stock to some extent,” Mkchyan stated.

According to him, coffee prices on international exchanges have increased by about 50-60% compared to March and continue to rise. The reason for this surge is this year’s poor harvest and the rising global demand, particularly for Robusta coffee.

Previously considered a low-cost option with demand primarily in low-income countries and among non-paying consumers, Robusta coffee is now sought after even by leading global coffee producers as it is used in espresso and instant beverages.

“In 2001-2002, Robusta was five times cheaper than Arabica, and demand was very low. In many countries, it didn't even sell. If before, a 10 kg bag of Indonesian Robusta was sold for $40, today its price has reached $80,” the businessman noted.

How much coffee prices will increase and how long the price rise will last is difficult for the businessman to predict. According to him, this primarily depends on major players in the global market, such as well-known networks like Starbucks, Tchibo, McCafe, and others. If the expected low harvest meets the annual demand of major consumers, Mkchyan believes that the market will stabilize somewhat. Otherwise, prices will continue to rise to meet existing demand.

However, the issue does not end with coffee price increases. The global market has also recorded unprecedented rises in cocoa prices due to the same reasons—poor harvests.

“Today, global chocolate manufacturers are faced with the reality of what they will do to overcome the challenges of price increases,”Mkchyan said, adding that the issue will also affect the Armenian confectionery market, from chocolate to biscuit production.

According to the businessman, the anticipated shock in the Armenian coffee and confectionery market can only be partially mitigated by a decrease in the exchange rate of the dollar against the Armenian dram. But this is only a minor mitigating circumstance, and avoidance of price hikes remains unlikely.

According to the latest report by the International Coffee Organization (ICO), global prices for Robusta coffee exceeded the record set in the last 45 years in April, reaching $40 for 10 kg. The organization notes a 9.7% decrease in coffee yields, with Indonesia being the main country of decline, which is also Armenia's main supplier. The loss of production there is estimated in double-digit figures.

The decrease in cocoa yields has caused much more serious ramifications in the global market. Experts estimate that by spring 2024, the price of cocoa raw materials will have risen by 65% compared to 2023. At the end of March, its value reached an unprecedented figure of $10,000 per ton.