Trouble brewing as budget coffee chains raise their prices

Budget coffee chains across Korea are raising prices one after another as higher ingredient and operating costs squeeze margins, which has raised concerns that a bastion of affordability may be crumbling.

Mammoth Coffee, a leading budget coffee chain, will raise prices for its iced Americano by 200 won ($0.14) starting Aug. 11, according to the beverage industry.

The price of a small iced Americano will increase 16.7 percent from 1,200 won to 1,400 won, while the medium size will rise 12.5 percent from 1,600 won to 1,800 won. For decaf iced Americano, the price will also increase with the small size rising from 1,900 won to 2,100 won and the medium from 2,300 won to 2,500 won.

Other budget coffee chains have also raised prices this year.

Mega MGC Coffee increased prices for its three MEGA Mix Coffee drinks by 200 won in June. The Venti raised prices for most beverages except Americano by between 100 won and 500 won in May. Paik's Coffee increased the price of its cafe mocha from 3,700 won to 3,900 won, while Banapresso raised the price of its cold brew from 3,300 won to 3,600 won.

Coffee chains say the increases are unavoidable because of rising raw material costs and higher operating expenses driven by global uncertainties and the weak won.

The price hikes have also raised concerns that budget coffee chains could lose customers as their price advantage weakens, as prices were the most important factor in choosing a budget coffee chain for 37.2 percent of the 1,600 consumers surveyed by the Korea Consumer Agency earlier this year. That was nearly twice the share of respondents who cited coffee flavor, at 19.2 percent.

BY LIM SUN-YOUNG [[email protected]]