• Nespresso has hiked the price of its capsules by R2 each, blaming rand weakness.
  • While the rand has strengthened from recent lows, it is still down almost 20% from the start of the year.
  • An analyst says more price hikes can be expected on imported goods.
  • For more articles, go to www.BusinessInsider.co.za.

South African fans of Nespresso have not taken kindly to a large price hike of its capsules during lockdown.

Nespresso, which is owned by Swiss-based Nestlé, confirmed the price hike of R2 per capsule, blaming rand weakness.

“Our goal is to keep our coffee prices stable. However, market developments linked to currency fluctuations have led us to slightly raise the price of our coffees in South Africa,” a spokesperson for Nespresso told Business Insider.

The rand has weakened from R14/$ at the start of the year to around R16.70 currently - a drop of almost 20%. During April, it briefly blew out to R19 for a dollar.

But coffee prices have slumped this year - due in part to a slump in the Brazilian currency. A weaker real usually encourages selling from Brazil's coffee producers, pumping more supply into the market and depressing coffee prices. 

The spokesperson said the price of Nespresso pods in SA was supposed to go up in April, but that had been delayed to May due to strict measures of Alert Level 5 of the lockdown.

“To keep our coffee prices stable we do not pass on fluctuations every time they occur but absorb them for as long as we can. We maintained a consistent price for several years. For example, in the beginning of 2019 we decreased our prices around 20%.”

The retail analyst Syd Vianello tweeted that the price hike of Nespresso came to 25% (from R80 per 10 pods “pre-Covid” to R100 currently), and that South Africans can expect more price hikes due to rand weakness – particularly of summer clothing in coming months.

Nespresso fans have expressed displeasure about the price hike:

Nespresso has more than a dozen outlets in South Africa, with a range of 29 different coffees. According to its spokesperson, South African taste preferences tend towards the more “intense” range of coffees (like Ispirazione Firenze Arpeggio, Ispirazione Ristretto Italiano and Ispirazione Roma).

Nespresso came under fire in March after a UK investigation revealed that children under 13 were working on farms in Guatemala that supply the chain with its beans.

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