Summer questions: Coffee Supreme CEO Andrew Low on the 80% cost spikes experienced by coffee roasters

Coffee Supreme chief executive Andrew Low says budget-constrained consumers have opted for luxury coffee at home. Photo / Supplied

Coffee Supreme chief executive Andrew Low reflects on a tough year, characterised by enormous cost increases and cafe closures. He hopes people see value in supporting their local outlet in 2025.

How would you describe 2024 for your business?

[It] presented a mixed bag, reflecting broader industry challenges and the impact of fluctuating consumer confidence.

Our wholesale cafe customers endured one of their most difficult years in recent memory, with more cafes closing than opening - a trend unprecedented in decades.

However, this challenging environment also revealed trading strengths. Our supermarket and e-commerce channels flourished as consumers increasingly opted for premium coffee at home. Despite budget constraints, consumers prioritised coffee quality, viewing Coffee Supreme as a small daily luxury they were unwilling to compromise on.

All in all, we experienced solid growth and are deeply grateful for the continued partnership and loyalty of both our wholesale and retail customers.

What will be your biggest business challenges in 2025?

Coffee roasters face unprecedented headwinds in 2025, primarily driven by exceptionally high green coffee prices.

Factors such as crop shortages caused by drought, disruptions from global conflicts, the actions of speculative traders manipulating the market, and climate-related legislation in Europe have collectively led to a staggering 80% increase in costs over the past year, the highest rise since 1977.

Our cafe customers are also feeling the pinch with rent, utilities, and wages as a percentage of sales being some of the highest in the world. When combined with food inflation, cafe margins are facing significant erosion which many operators are struggling to pass on confidently to consumers to maintain margin.

What opportunities do you see in 2025?

Within our business we’ve focused on galvanising our teams around a new purpose, mission and vision that speak to the way we want to turn up for our customers and consumers.

While we can’t control the external pressures, we can make sure we’re match fit and ready to take on all the opportunities presented to us by upgrading our factory sites, our cafes, and investing in the development of our teams in our markets across New Zealand, Australia, and Japan.

Our biggest opportunity is to work with the cafe industry to better communicate the intrinsic social value of the local cafe.

Cafes often serve as a platform for community and connection and sadly, as some iconic cafes make the choice to close, it’s only then that we consider what we’d be willing to pay to keep our local going.

I know it sounds hard to swallow when most families are also feeling the pinch, but my hope is that we accept a cup of coffee which was hand-picked, hand-roasted and hand-made fresh for you in five minutes by a trained barista shouldn’t cost the same as a bottle of filtered tap water should it?

What will it take to kickstart New Zealand’s economy?

The New Zealand economy has always shown an ability to recover quickly.

The recent rate cuts have had both an emotional and financial impact on spending and combined with summer’s warmer weather, we are confident that families will start returning to their local cafes, trying out new hospitality venues and generally spending more time out and about.

Hospitality people are a resilient bunch. We reinvented ourselves more than once through Covid times, and we will continue to see this spirit come through in 2025 through exciting new offerings.

How will a Donald Trump presidency affect the geopolitical dynamics?

From our perspective, we translate any potential impact to the intrinsic cost of trading commodities. As the market built in a Republican win, the NZD/USD exchange rate weakened the cross rate.

Headlines around tariffs naturally make all exporters - particularly primary producers – nervous, as we have seen the previous impact on steel and aluminium tariffs. The unknown benefit if China does receive significantly higher tariffs is that the New Zealand trade with China may strengthen, offsetting some/all potential losses.

What are the concrete actions your company has taken to reduce climate change?

Our environmental, social and governance (ESG) strategy is aimed at providing consumers with high-quality coffee they can feel good about drinking.

Our ESG strategy focuses on sustainable sourcing and direct trade, implementing sustainable farming practices and minimising environmental impact through responsible water management, soil conservation, and energy-efficient processes, and reducing waste at cafes and production facilities, exploring renewable energy sources, and optimising roasting processes.

We also support community initiatives such as beach clean-ups and community organisations and charities such as the Mental Health Foundation of New Zealand, the Wellington City Mission, and the Common Unity Project.

Our recent B Corp certification underscores our commitment to social and environmental responsibility.

How are you increasing diversity in your business?

Coffee Supreme is committed to fostering a diverse and inclusive workplace. Our hiring practices actively combat unconscious bias through committee-based hiring and regular diversity training. We actively promote daily learning of te reo Māori and fully embrace Te Wiki o Te Reo Māori.

Our collaboration with the Mental Health Foundation of New Zealand on our “Kōrero Mai” product, at a time where cultural and language diversity has been under the spotlight, is our way of showing support and embracing our country’s diversity while promoting connection and discussion.

What is your New Year’s resolution?

In 2025 I turn 50! At a recent talk by Richard Branson, I was impacted by his comment that at 50 there are only two paths to take: accepting that you are getting older and that staying fit and healthy gets harder so just enjoy life (sounds great hey), or see your health as the most important asset you have and invest heavily in exercise, diet, and mental restoration.

I have set myself a challenge to be the fittest and healthiest I have ever been as I turn 50, a promise I am making for my family, as being around for my children, and being active is the only goal that truly matters.

Where and how are you holidaying this Summer?

I have just returned from a good friend’s wedding in Mexico with a quick stopover in Hawaii, which has given me a much-appreciated time out from a very big year. I am hosting Christmas at our house this year with 21 family members (13 of whom are aged under-16) so we will be surrounded by love, chaos, and wrapping paper.

What would you recommend as a good podcast to listen to over summer?

For a deep dive into the world of coffee, I recommend the Daily Coffee Pro Podcast by Map it Forward which strikes a great balance of producer, trader, roaster and cafe content.

As a business leader, I am always tuning back into the Masters of Scale podcast by Reid Hoffman, as so many of his interviews mirror the journey of a founder overcoming adversity and helping a business scale. This is very analogous to the Coffee Supreme story as the business looks to become “the best coffee company in the world … with a red logo”.