Tea, coffee producers in Russia set to hike prices 6%-9% in Sept - paper

MOSCOW. Aug 9 (Interfax) - Major producers of tea and coffee in Russia are raising wholesale prices for retailers by 6%-9% as of September, while prices for the products of confectionary factories will increase by 15%, national daily Kommersant reported on Wednesday.

Tea and coffee producer Mai (Maisky, Lisma, Curtis, Richard and Coffesso brands), for example, has notified retailers that it is raising wholesale prices by 6%-9% as of September 1, the paper reported, citing a letter from the company.

The company attributed this to the recent high volatility of the ruble's exchange rate, which has dramatically increased prices for imported raw materials. "We regard the situation as difficult," Mai said in its letter. The company confirmed it sent the letter, adding that imported feedstock and materials account for more than 80% of its production costs, the paper said. The company also said it will raise prices gradually "so as to avoid a sharp jump."

JDE (Jacobs, L`OR, Tassimo and Pickwick brands) sent retailers a similar notice, also citing the depreciation of the ruble. The company declined to comment.

Orimi (Greenfield, Tess, Jardin) has warned retailers of a 4-5% increase in prices for its products, which it said is "far less than the level of inflation," and coffee producer Madeo also said it plans to raise wholesale prices, the paper reported.

Coffee producers are also being forced to raise prices because world coffee prices have risen by about 20% since the start of 2023, JDE said in its letter to retailers.

Coffee bean futures on the NYMEX were at $1,650 per tonne on August 8, which was down from a 2023 peak of $1,900 in April. Tea prices have risen by almost 50% since the start of the year, reaching $3,280 per tonne on August 8. The growth is being driven by drought in Asia, which has already reduced the tea harvests in India and China by 30%-40% and 20%, respectively, In Pursuit of Tea (U.S.) reported.

The CEO of tea and coffee association Roschaikofe, Ramaz Chanturia said Russia's southern Krasnodar region covers just 0.2% of domestic tea demand. However, 95% of imported tea and 75% of coffee is packaged in Russia.

Kommersant, citing market sources, said coffee bean and tea inventories are almost exhausted, which means prices for their products could jump 20% by winter.

Candy makers also plan to hike prices as of September 1. Lotte KF Rus, a subsidiary of South Korea's Lotte (Xylitol, Joo Chef`s, Chic Choc brands) has warned retailers of the upcoming increase, the paper said, citing a letter the company sent to chains. Storck, a subsidiary of Germany's August Storck KG (Merci, Toffifee, Mamba) has notified retailers of a 5%-16% price increase. These companies did not respond to questions, the paper said.

Confectionary companies are also heavily dependent on imported ingredients, which account for 30% to 70%, the National Rating Agency estimated. The problem has been exacerbated by a lower cocoa bean harvest in West Africa due to drought.

The Agriculture Ministry said on Wednesday that prices for products such as tea, coffee and chocolates are affected foremost by the cost of raw materials that are not produced in Russia. "However, it should be noted that there a wide assortment of these products on the Russian market in various price categories," the ministry said.