# Beans for Brexit



## James87 (Sep 8, 2016)

Just having a browse and came across an article on the Has Bean blog about Brexit and how it might end up hitting us where it hurts most - in the cup...

http://www.hasblog.co.uk/brexit-hangover

Interesting, if a bit worrying, read. Might be worth getting an order or two in before this happens







. (no I don't work for Has Bean







).


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## Jumbo Ratty (Jan 12, 2015)

id rather pay more for my beans and be out of the EU thanks


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## Phobic (Aug 17, 2016)

I give this thread a day before it gets locked


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## James87 (Sep 8, 2016)

Wow, OK. (I must express that this is intended to be a non-political post. The article is more about how the changing currency exchange market is going to affect the price of beans, with Brexit simply being the trigger, but, again, OK)


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## aaronb (Nov 16, 2012)

It's common sense. I said the price of coffee would go up on here a few weeks ago too.

I know shops who bring in coffee from mainland Europe roasters are really suffering because of the poor exchange rate.


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## Phil104 (Apr 15, 2014)

The real point is that whatever one's political perspective, Brexit is probably no more than an excuse for currency traders to make money, and whatever the reason - often oil is the prompt - nearly all commodities are subject to currency fluctuations&#8230;and that increasing prices don't mean that coffee farmers are getting more.


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## The Systemic Kid (Nov 23, 2012)

Well made point, Phil.


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## Phobic (Aug 17, 2016)

James87 said:


> Wow, OK. (I must express that this is intended to be a non-political post. The article is more about how the changing currency exchange market is going to affect the price of beans, with Brexit simply being the trigger, but, again, OK)


My comment was a bit tongue in cheek, there's a few other threads that got locked once they strayed into politics. You might not have meant anything political by it, but others might just draw out the political side.

Hopefully not as it's an interesting area to talk about.

ultimately if costs rise for whatever reason retailers are going to have to put their prices up at some point unless they're big enough to ride the swings out.


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## James87 (Sep 8, 2016)

Phil104 said:


> The real point is that whatever one's political perspective, Brexit is probably no more than an excuse for currency traders to make money, and whatever the reason - often oil is the prompt - nearly all commodities are subject to currency fluctuations&#8230;and that increasing prices don't mean that coffee farmers are getting more.


Precisely, if the increase in price resulted in farmers getting more money then the trade off might be worth it. But no, imaginary money going down the imaginary drain means actual money can buy less actual beans with nobody benefiting other than those using the situation to short the pound and make a few bob (and buy more beans haha).


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## The Systemic Kid (Nov 23, 2012)

Phobic said:


> I give this thread a day before it gets locked


Mods don't enjoy or like locking threads, so this will remain - pun intended - providing it doesn't spiral into Brexit/Remain slagging match.


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## Glenn (Jun 14, 2008)

Spot on Patrick

Hopefully most people have noticed we have a light touch towards moderation.

As long as this does not stray into a slanging match it can remain.


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## DavecUK (Aug 6, 2013)

I wouldn't get too frenetic about the increase in cost of green coffee. Sure the wholesale price has gone up, but not by that much in the scheme of things. If the direct cost increase only was passed along, you might see a rise in coffee between £1.20 and 2.00 per kilo,depending on the cost of the coffee, this is for decent to very good coffees.

Where the problem will come, is if roasters feel they have to not work on a direct cost plus basis but use the profit calculations on the increase. This of course will be a competitive decision for them.

e.g. They have 3 scenarios and variations thereof.

1. Green Coffee cost £6 wholesale for 1 kg retail....markup 300% giving around £18 per Kg

2. Green Coffee cost £7.20 (cos of 20% reduction in value of GBP).....so £18 per kg + £1.20 giving £19.60 retail

3. Green Coffee cost £7.20 (cos of 20% reduction in value of GBP).....markup 300% giving £21.60 retail

If they don't increase the price at all in the above example they lose 1.60 per Kg.

If they add the extra cost only,* the amount of money they make is unaffected* (profit goes down of course), but the cost of stock goes up and the risk increases slightly. in the last example. So as a business they are not in a worse position apart from cost of stock.

in the last scenario, their profitability is maintained, *the amount of money they make goes up*,but the cost of stock and risk is now covered. As a business, they run a higher cost of stock, but make more money.

All this assumes there is no business loan which increases as a result of increased stock holdings., if there is, in each scenario, they need to factor in the cost of the loan in.

For the anally retentive, it's just an example, not reflective of actual prices or coffee costs

P.S. I think one of the things we needed to come to terms with as a country is, our pound was overvalued and we needed this adjustment. It would have come sooner or later.


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## Phobic (Aug 17, 2016)

I think you're bang on Dave, hopefully the coffee world isn't like the energy world, we know what happens when oil/gas prices increase....


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## The Systemic Kid (Nov 23, 2012)

DavecUK said:


> [/i]P.S. I think one of the things we needed to come to terms with as a country is, our pound was overvalued and we needed this adjustment. It would have come sooner or later.


Exactly - a point repeatedly made for some considerable time in the financial press.


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## paul whu (Sep 25, 2014)

If it were just coffee going up in price by the odd £3 per kilo I wouldn't worry too much. But coffee is just one of many everyday items likely to crank up the cost.

same rule (cost increase) applies to most imports as we're not great against the Euro either.

If you have plenty don't worry. If your skint, things are about to get tougher. Cheers Brexit.


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## 4515 (Jan 30, 2013)

I read Steves article a few days ago and understand the sentiment.

It would be nice to think that our beans will increase by the increased purchase price of green beans only. I cant see this happening as the roaster will want to maintain their margin as much as possible, and rightly so.

Not sure if it was BS but we had coal delivered last week and were advised that the price will be increasing due to the value against the dollar. Looks like it will be more than coffee that will be impacted


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## UbiquitousPhoton (Mar 7, 2016)

Its going to be pretty much everything - Marmite has gone up 12.5% and its manufactured in Britain.

We don't really mine coal here anymore, so that will definitely increase - even the export boost given to us by the weaker pound is generally cancelled out by the fact that most of the components required have to be imported, and thus are costing more. If you factor in that petrol is going up sharp, everything is going to get that extra tariff as well. I suspect given the way things are going we will be looking at near as damnit ~20% rises pretty much across the board before next march.

I'm not sure if its overdue or not - I don't think its a good thing either way, especially not for those already stretched - remember the new lower benefit caps came in today, apparently leaving plenty struggling for rent already. The pound is being used politically I fear, more than financially, so there is little to be gained either way except less exposure to risk for the big traders, unfortunately.


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## Phobic (Aug 17, 2016)

working dog said:


> the price will be increasing due to the value against the dollar. Looks like it will be more than coffee that will be impacted


everyone rushes to push up prices using brexit and exchange rates as the rationale whether that's the real reason or not, and then they'll conveniently forget to reduces them when exchanges rates change in our favor - hopefully market forces and competition will balance things out eventually but that doesn't seem to work for Petrol...


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## Split Shot (Sep 24, 2016)

I'm really disappointed...

I opened this thread thinking I was going to find out what Beans to brew for Breakfast.... 

No, but seriously. This isn't a good thing as inflation doesn't work on linear "buy, mark up (or not), then sell" <game over> models. Company finances may work like this. But national economies are systemic and there are feedbacks. </game>

Essentially we are (from our specific interest) talking about the 'food industry'.

Food price increases are not a welcome thing, I think, particularly given the how marginal a noteworthy proportion of our society seem to be these days (for whatever reason).

Political camps put aside, I think there is broader cause for concern here and there needs to be mitigation planned... at least during transition, somehow.

Just my £0.02....


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