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The Impact Of Rising Coffee Prices on Consumer Habits

Coffee prices have surged by up to 20% over the past few months, compelling consumers to rethink their habits. This increase is reflected not only in supermarkets but also in cafes, where the beloved drink of the Greeks is experiencing a new trial.

In particular, Greek and instant coffee, which make up 70% of retail sales by volume, saw a price hike of 14% and 11%, respectively. Meanwhile, espresso coffees—ground and in capsules—saw an average increase of 6%.

The price of a 200-gram package of popular instant coffee now stands at €9.38, up from €8.48 in February, while a 340-gram package of Greek coffee has risen to €7.60 from €6.30.

Cafeteria Prices Keep Climbing

The cost of coffee outside the home has also edged up, with increases ranging from 5% to 20%. While the hospitality industry tries to absorb these increases, operational costs like wages, rent, and energy remain principal concerns. Recent tax changes, like the VAT increase from 13% to 24%, coupled with the Special Consumption Tax, further burden the sector.

The Influence of Market and Production Factors

The surge in coffee prices is largely due to market concerns over this year’s harvest in Brazil, the largest Arabica coffee producer globally, and a significant drop in Robusta exports from Vietnam. The price of Arabica coffee hit a historic high of $440.85 per pound in February, a 17.72% increase since the start of the year.

Consumers are adapting by drinking more coffee at home, with only 30% of consumption happening outside the home, down from 60% pre-COVID-19. Many chase promotions and opt for more affordable private-label brands.

Embracing New Buying Patterns

In January, consumers rushed to take advantage of steep discounts offered by multinational companies on instant, Greek, and espresso capsules before the expected price increases. This led to a turnover of €54.11 million in retail, up 4.6% from 2024, according to market research by Circana.

Interestingly, despite a 14.1% decrease in espresso sales, private-label products gained significant traction, increasing by 36.5% over the same period, with sales doubling since 2021. Espresso capsules are now chosen based on available offers, making it a competitive market with no brand holding more than 35% market share.

In summary, while coffee remains a staple, changing market dynamics and economic factors are shifting consumption patterns, offering an array of opportunities and challenges for retailers and producers alike.

EBA Unveils 2024 Report to Strengthen Supervisory Convergence Across the EU

Overview

The European Banking Authority’s 2024 annual report details a comprehensive effort to harmonize supervisory practices across the European Union. The report outlines strategic initiatives across prudential supervision, resolution and crisis management, digital finance, consumer protection, and the interim AML/CFT framework until the end of 2025. This marks a decisive step in implementing further recommendations from the EBA’s evaluation of regulatory efficiency.

Consolidating Prudential Supervision

The EBA’s European Supervisory Examination Programme for 2024 focused on critical areas such as liquidity and funding risk, interest rate risk, and the operationalization of recovery measures. With risk levels remaining stable amidst ongoing challenges in data quality, stress testing, and modelling assumptions, the EBA is set to intensify its monitoring activities for online deposit platforms and oversee compliance with Supervisory Outlier Tests in 2025.

Advances in Resolution And Crisis Management

In the realm of resolution, the report highlights significant progress in operationalizing resolution tools, notably the bail-in mechanism in cross-border environments. Improved coordination among authorities, enhanced management information systems, and persistent efforts to refine data quality and legal recognition issues underpin this advancement.

Strategic Developments in Digital Finance

With digital finance at the forefront, the EBA has prioritized its preparations for the implementation of the EU’s Markets in Crypto-Assets Regulation. Efforts include the supervision of asset reference tokens and e-money token issuers, the development of an EU-wide supervisory handbook, and the coordination of workshops aimed at establishing a unified supervisory approach from the outset.

Enhancing Consumer Protection And AML/CFT Measures

The report also underscores improved cooperation and risk-based supervision among national authorities in consumer protection and AML/CFT. Notable progress has been achieved through AML/CFT college monitoring and implementation reviews, as the EBA prepares for the eventual transfer of AML/CFT supervisory responsibilities to the new EU Anti-Money Laundering Authority by the close of 2025.

Fostering A Common Supervisory Culture

Beyond sector-specific improvements, the EBA continues to champion supervisory convergence through robust cross-border initiatives including peer reviews, Q&A sessions, breach of Union law investigations, and comprehensive training programmes. In 2024 alone, 23 courses were delivered to over 3,000 participants, reinforcing best practices and aligning supervisory standards throughout the EU.

Future Trajectory

Looking ahead, the EBA is set to place greater emphasis on the effective implementation of the Single Rulebook. This strategic pivot will enhance supervisory outcomes and ensure the consistent application of regulatory measures, as reflected in the annual reports to the European Parliament and the Council under the Supervisory Review and Evaluation Process.

With these measures, the EBA reaffirms its commitment to building a unified and resilient supervisory framework, essential for navigating the complex regulatory landscape of the European financial sector.

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