"Milk Price Increased by 31 Won, but Cafe Latte Rose by 500 Won"

Consumer Organizations Council Analyzes Coffee Franchise Prices

The Korea Consumer Organization Council (hereinafter referred to as the 'Council') announced on the 8th that coffee franchise companies have excessively raised the price of cafe latte regardless of the milk price over the past two years. According to the Council, although the milk price included in cafe latte increased by 31.3 won, the companies raised the latte price by about 400 to 500 won.

Cafe Latte [Image source=Pixabay]

The Council investigated the cafe latte prices of eight coffee franchises from 2022 to November 2023 (▲Starbucks ▲Coffee Bean ▲Twosome Place ▲Paul Bassett ▲Mega MGC ▲Mammoth ▲Compose ▲Paik’s Coffee). The product sizes surveyed were the basic sizes: Starbucks tall size, Coffee Bean and Mammoth small size, and Ediya large size.

As a result of the analysis, the total price increase rate over the two-year period for the eight brands was 13.4%. Most franchise cafe brands implemented fixed amount price increases, and except for Mega MGC, most franchises raised prices by about 400 to 500 won. In particular, Coffee Bean raised prices twice in two years, and during the 2023 price increase, latte beverages alone were raised by 200 won.

Among these eight franchise coffee brands, except for one, both high-end and mid-to-low priced franchises raised prices by similar amounts over the two-year period, maintaining a similar price level within the coffee market.

As of November 2023, the company with the highest price for a cup of cafe latte was Coffee Bean (5,800 won), and the cheapest was Mammoth (2,200 won). However, in terms of price increase rate, Mammoth Coffee’s cafe latte price rose the most at 29.4%.

Regarding this, the Council stated that the impact of the milk price increase was not significant, and despite the decline in coffee bean import prices compared to last year, coffee franchise companies excessively raised latte prices.

The Council pointed out, "The amount of milk used in a latte is 250 ml, and the estimated milk price increase per latte is 31.3 won, but companies raised the latte price by 400 to 500 won," adding, "Companies raise product prices whenever major raw material prices increase, but coffee franchise companies should be cautious in deciding prices next year."

Dairy Industry Raises Milk and Dairy Product Prices Simultaneously... Concerns Over 'Milkflation'

Milk displayed at a large supermarket in Seoul

The dairy industry raised the prices of milk and dairy products simultaneously starting October 1. This was because the increased raw milk price for this year was applied from that date. Consequently, there is a possibility of a 'milkflation' phenomenon, where prices of cheese, yogurt, butter, and other dairy products, as well as bread, coffee, and ice cream made with milk, will rise in succession.

Seoul Milk Cooperative, the industry leader, raised the ex-factory price of 'Na 100% Milk' (1ℓ) by 3% to 2,900 won at large discount stores, and convenience store milk prices also rose by 4.9% to 3,200 won. The basic raw milk price for drinking milk this year increased by 88 won per liter compared to last year, reaching 1,084 won per liter. The dairy company stated that considering consumer fatigue due to high inflation and government price control recommendations, the price of 1 liter of plain milk was set below 3,000 won at large discount stores.

This content was produced with the assistance of AI translation services.