Upward pressure on pricing

We in March 2020 are living in crazy times…

There’s a virus going ’round and it’s making some people a little sick, some people a lot sick and it can threaten the very existence of those with vulnerable immune systems. Seemingly, the cure is to purchase a year’s supply of toilet rolls to build a fort to guard against exposure…

On the health front, it’s looking like our kids will be spending more time at home in the next couple of months and that more of us will also be working from home as Australian authorities attempt to minimise transmission of COVID-19.

In addition, the share bots are going nuts and we’re all experiencing hugely volatile world share markets and exchange rates. The Australian dollar exchange rate is also taking a substantial hit as we’re no longer the safe haven we once were.

As finances go crazy, there is significant pressure on our exchange rate and this is certain to influence the prices and availability of espresso equipment in the short to mid term.

  1. Brands such as Rocket Espresso, Crem, Vibiemme, La Marzocco, Profitec, Quickmill, Lelit, ECM and a host of others are manufactured in Europe.
  2. Synesso and Slayer are manufactured in the USA
  3. Olympia Express is manufactured in Switzerland

In the last month,

  • $AUD has depreciated by 8% against the Euro
  • $AUD has depreciated by 10% against the Swiss Franc
  • $AUD has depreciated by 5% against the $USD

For those contemplating an espresso machine, we are anticipating supply shortages out of all manufacturing countries as border traffic is restricted and that price increases of up to 10% on current prices are inevitable. Olympia Express prices have already had to move as the margins on this brand are miniscule.

What this means is that if you are going to be working from home and don’t have the opportunity to grab a coffee on the way to work, you might want to consider bringing any planned espresso gear purchases forward should you have the means to do so. At least the coffee will be good while you are housebound.

I hope this all blows over quickly and that everything settles- but it’s looking like 2020 may be the weirdest year in many.

Stay safe and well. We’re here if you need us and for the moment, stock availability is ok.

Chris

One comment on “Upward pressure on pricing
  1. Rohan Claffey says:

    Good analysis Chris. Here is a back of envelope to add weight.

    My household (mainly me to be fair) in normal times drinks average 3 cafe-bought espresso per day.

    If home restrictions last say 100 days (conservative) and the difference in cost per cup home-vs-cafe is 3 dollars, there is 3*100*3 = $900 not spent (I won’t say “savings”)

    Then consider interest rates below 3%, and currency rates per above. And even resale price of gear in eg 6 months if necessary (when new stuff will be dearer)

    If your financial circumstances are ok this is a good time to have a play with new coffee gear!

    PS – tough times for cafe’s acknowledged, but we need to stay home to save lives and come out the other end in reasonable shape

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