Why Our Costs Have Increased

As a company we've always prided ourselves on buying high quality coffee, from the same producers, year after year. This is something we will never change.

Our costs as a company have increased a lot over the past few months. I'm sure many of you aware of some of the below points, however we just wanted to outline the reasons for our latest price increase.

THE COST OF OUR GREEN COFFEE HAS ALMOST DOUBLED

A WEAK POUND

gbp to usd exchange rate

The biggest driver of our cost increase comes from the weak GBP because we buy our coffee in USD. Although we can protect this to some extent, the recent swings have meant that our coffee prices have increased significantly.

SUPPLY AND DEMAND

Brazil is the largest coffee producer in the world, so when the weather’s not great in Brazil this causes problems for the whole coffee industry.

A combination of drought and frost in Brazil means that production decreased by up to 40% in 2021 - on a recent farm visit in Minas Gerais, one smallholder farmer even told me that his annual production dropped from 13MT to 3MT. This not only had an impact on coffee from Brazil, but on all coffee globally with prices doubling - a small silver lining for producers who have a lot less coffee to sell.

INCREASED SHIPPING COSTS & HIGHER ENERGY BILLS

INFLATION

Inflation doesn't just affect coffee - it’s one of the key reasons prices are going up across the board.

COVID, geopolitics, and the war in Ukraine have had a big impact on the global supply chain, meaning that products such as coffee can’t get where they need to go. This has caused a big increase in shipping costs, which in some cases have been five times higher than a year ago.

Energy prices have been affected all around the world. We use gas and electricity to power our roaster and roastery - like everyone else we're seeing substantial increases right now. This has also affected the cost of our packaging, with higher manufacturing costs and increased demand for boxes caused by growth in eCommerce deliveries and raw material shortages.

All of this means it costs more to move, power, and pack things, which equals higher prices on well…just about everything.

If you have any questions on any of the above, please feel free to drop me an email.

Dan

dan@chimneyfirecoffee.com

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