Rising costs pressure local coffee-shop chains

Major sit-down coffee shops are likely to raise their beverage prices by the end of the year to deal with higher materials costs and the rising euro, according to chain operators.

Prices of coffee beans, milk, syrup and steel have been surging for months, eroding the profit margins of coffee chains, which rely heavily on these imports, they said.

"We've been suffering from rising commodity prices for several months," said Vincent Luo (羅文聖), marketing director of Barista Coffee (西雅圖咖啡), which has 37 outlets around the nation.

With international prices of coffee beans jumping 5 percent since last year, he said the company is evaluating the need to hike retail prices at the year's end.

The coffee-chain giant Starbucks Corp announced earlier this week that it would hike prices by around 5 percent at the end of the year in the US to reflect rising milk prices and insurance expenditures for employees.

Still, President Coffee Corp (統一星巴克), the Taiwanese franchisee in charge of Seattle-based Starbucks operations, appears to have no plan to follow US headquarters' move soon.

"That is a regional policy and will not affect our coffee business here," public relations official Anita Jo (周怡君) said.

Jo said the local Starbucks' supplies are stable and that there was no need to increase prices in the short term. But she declined to comment on whether the pricing policy would remain unchanged for the rest of this year.

President Coffee currently has 140 Starbucks outlets around the country, making it the nation's largest coffee-chain operator.

The second-largest chain, Dante (丹堤咖啡), has also seen an upward trend in milk prices while costs for its coffee beans imported from Singapore remain unchanged, vice president Roger Hsu (徐恆鈞) said.

He said that, because chain operators usually sign annual contracts with suppliers, short-term price fluctuations would not be immediately reflected in the outlets.

However, if dairy costs continue to rise, Dante would not rule out the possibility of boosting prices next year, Hsu said.

While the sit-down coffee chains are striving to absorb rising materials costs, E-Coffee (壹咖啡), an express-style chain where customers can purchase a cup of coffee on the go, raised its prices on May 1.

"With everything costing more, we had to raise retail prices by NT$5 on coffee and milk-related items, which account for around 50 percent of our products," E-Coffee president Sam Yen (顏文山) said.