Brewing trouble: Coffee brand percolates price hike due to costs

A popular coffee brand plans to increase its prices by 5% to 10% this month, citing rising production costs. This follows the recent price adjustment by Ajinomoto for its monosodium glutamate (MSG) products, which saw a 4% to 5% increase for packages of 250 grammes, 500 grammes, and 1,000 grammes.

Somsak Pornratanacharoen, honorary advisor of the Thai Wholesale and Retail Association, confirmed the coffee brand’s decision to raise prices. The announcement comes amidst a backdrop of economic uncertainty and a declining purchasing power among consumers. The current economic situation has left many people without increased income but facing higher living expenses, leading to more cautious spending habits.

The coffee brand, a market leader, intends to implement the price increase within this month. This adjustment is directly attributed to the rising costs of production, which have been impacting various sectors. Consumers can expect to see the price hike reflected in the cost of instant coffee powder.

“The economic climate has not improved, and it appears to be worsening. People are not confident in the economic conditions. They have no additional income but face increasing expenses due to the rising cost of living, making them more frugal and buying only what is necessary.”

The decision by the coffee brand is a reflection of the broader economic challenges currently faced by both consumers and producers. The cost of living is on the rise, driven by inflation and other economic factors, resulting in higher prices for everyday goods and services. This trend is expected to continue, placing further strain on household budgets.

The recent price increase by Ajinomoto for its MSG products on July 1 demonstrated the ongoing impact of these economic factors. The adjustment saw a 4% to 5% increase across various package sizes, signalling a trend that other brands are likely to follow as they grapple with similar cost pressures.

Rising costs

Consumers are likely to feel the pinch as more brands adjust their prices in response to rising production costs. The cumulative effect of these increases could lead to a further decline in purchasing power and consumer confidence, exacerbating the current economic challenges.

In the face of these rising costs, consumers may need to make more strategic choices about their spending. Essential items are becoming more expensive, and discretionary spending is likely to be reduced as households prioritise necessities.

The economic landscape remains uncertain, and the trend of increasing prices is a significant concern for consumers and businesses. As production costs continue to rise, companies are faced with the difficult decision of whether to absorb these costs or pass them on to consumers. For many, adjusting prices is the only viable option to maintain profitability, reported KhaoSod.