This article, translated from the original article in The Telegraph, could have been written about Portugal, where traditional espresso is around €0.70 and the specialty coffee community finds it difficult to grow its audience when it presents a fair price for espresso.

The reasons for the low cost of espresso in Portugal are the same as those given in Italy - low start-up costs, with large commercial coffee companies paying for the investment needed to set up a café, tax evasion, with "cafés" being paid for in cash and without an invoice, the population asking for espresso as a right and considering it cultural, and, of course, the need to keep the price in line with the competition.

Specialty coffee shops thus work to showcase the quality of their coffee, the training of their baristas and provide an espresso experience that values coffee, the drink and all the culture associated with it, in order to present a fair price for espresso.

The battle for €1 espresso

Translation by Vitor Rodrigues. Source: The Telegraph.

Espresso is sacred in Italy. It's normal to pop into a café, grab a quick shot and rush back to the office. In the UK, where an average cup of coffee costs around £4.40, according to research firm Finder, with some prices exceeding £5.

Italians enjoy some of the cheapest coffee in Europe, costing an average of €1.5 per cup. An espresso can be found for as little as one euro in many Italian cafés. But despite an immobile culture in which cheap access to caffeine is enshrined, the Italians' cheap stimulant is under threat.

So how has Italy managed to resist global inflationary pressures and a shortage of coffee beans to keep its coffee so cheap - and are those days coming to an end?

Low start-up costs

Someone who wants to open a café in the UK faces huge start-up costs, such as equipment and furniture, which they have to recoup in coffee sales. In Italy, most owners don't have to worry about these costs, explains Andrea Pettinari, who owns and runs Caffe dell'Arte in Cagliari with his partner.

"The roasters offer to cover the initial costs - they pay for espresso machines, cups, napkins, etc.", he says. "In return, the coffee shops sign a contract promising to buy a certain amount of beans every week at a certain price. But there's a hidden cost: the roasters usually charge a higher than fair rate and make the cafés commit to buying much more coffee than they really need."

Recently, Pettinari's business broke away from this ownership model and became independent. But this is extremely rare, he stresses.

"I would say that around 99% of the owners in Italy are essentially roasting companies - independent coffee shops are very rare here. People think we have lots of independent coffee shops and no coffee shop chains, but the reality is that coffee companies control the vast majority of them."

Italian coffee shops are also able to consume much larger volumes of coffee, adds Marco Cappellari, who runs the Melaleuca specialty coffee shop in Florence.

"There's a walk-in-walk-out culture here, which means that coffee shops tend to sell more coffee than the British or Americans," he says. "Coffee shops often don't even have seating, and most people don't ask for milk in their drink, so it's a 45-second transaction. While a hipster in London prepares a perfect apartment white, a barista in Milan has already prepared and served four or five espressos for a similar total price."

Tax evasion is common

Italy leads Europe in tax evasion, according to the European Commission, with an estimated 14 billion euros in VAT in 2021, or 24% of the EU total. The coffee industry is no exception, but Cappellari argues that this could be essential for the survival of some coffee shops.

"Unfortunately, the pressure to avoid paying taxes can be fundamentally linked to a coffee shop's ability to exist, so it's something that happens quite often. If every coffee shop in a city sets the price of espresso at €1.20, another coffee shop may have no choice but to do the same thing in order to compete."

Coffee shops are also often owned by couples or families, adds Cappellari, which means that spending money on decent wages is not as much of a concern as in the UK, where they usually have to employ external staff.

A political price

Italy runs on caffeine - consumer group Assoutenti has estimated that locals and tourists consume a total of six billion coffees a year in the country's coffee shops, bars and restaurants.

Tampering with the fundamentals of the industry is treated with skepticism and contempt. Even small price increases are acutely felt by those who consume five cups of coffee a day, and sellers can face annihilation for implementing them, leaving them strongly reluctant to do so.

"Coffee is not seen as a product in Italy, but as a human right - people think that society owes them coffee," says Pettinari. "So it has to be cheap, because everyone should be able to afford it. But if we maintain the price of espresso, it will be unsustainable for everyone in the supply chain - farmers, baristas, owners . Suddenly, there's no profit margin."

Cappellari adds: "If it goes up to €1.80 or €2, you'd immediately lose customers, unless you're in a train station or a busy tourist area. The business would die very quickly. People dictate what the price will be."

Both Cappellari and Pettinari now run specialty coffee shops, which means that their customers expect a higher degree of quality and therefore accept a premium price. But making this transition wasn't easy, says Pettinari.

"We raised our prices and now our espresso costs around 50 cents more than the city average. We lost a lot of customers - many of our old regulars left because they couldn't understand, even though we tried to make them understand the reasons. But we have gained some new customers, who appreciate the quality and the reasons for the increases. The real problem is the expectation of a fixed price instead of a low price," says Luigi Morello, president of the Italian Espresso Institute. "It would be unthinkable to order a glass of red wine or beer in a bar, let the barman choose and serve as he wishes, and always pay the same price."

Cheap espresso is under threat

A number of factors are making it increasingly unsustainable for companies to offer a €1 espresso. Coffee bean prices rose 48% last year and have almost tripled since their lows in 2018, with climate change making growing conditions increasingly hostile.

Micah Sherer, from the roasting company Skylark Coffee, says: "The two countries that produce most of the world's coffee, Brazil and Vietnam, had poor harvests due to bad rainfall, which put upward pressure on the price. But in a few years it will be worse due to climate change."

Pettinari adds: "Coffee is a very delicate plant and requires certain conditions to produce good fruit. It needs a certain altitude - more than 1,600 meters above sea level - and a tropical climate. Farmers are forced to climb the altitude of the mountains year after year, and as the mountains are pyramids, the higher you climb, the less agricultural space you have."

Attacks on cargo ships in the Red Sea by Houthi rebels earlier this year also hit the supply of coffee beans, contributing to a rise in prices.

Italy may finally be forced to accept a 'third wave' of coffee

The "third wave" of coffee, a movement centered on superior quality, for which consumers are willing to pay higher prices, arrived in the UK in the early 2000s. But for Italians, the cultural shift from ultra-cheap espresso to a €4 cappuccino has yet to catch on.

"Before the third wave, there wasn't much of a coffee culture in the UK - it was something new, so it took off," explains Pettinari. "In Italy, there's such a strong coffee culture that we first needed to break down that wall before we could do something new. But the big coffee companies don't want that to happen, because they'll lose profits. Currently, they can buy a bag of green coffee for a dollar a kilo and sell it for 25 dollars in coffee shops."

But dragging Italians into the third wave of coffee and the higher prices to which the rest of Europe has become accustomed could prove to be a fruitless task, says Luigi Morello of the Italian Espresso Institute.

"Tastes change, including those of Italians, but suddenly going from a full-bodied coffee, which tends to be balanced with notes of nuts and toast, to a less full-bodied one, with floral, sometimes fruity aromas and an acidic taste, is not an easy step. Italians drink espressos, not milk-based drinks, and that also makes a difference to the taste."

But Pettinari argues that a price increase reflecting higher product quality and changes in the supply chain should happen sooner rather than later.

"Super-cheap espresso prices should not be sustained. It diminishes the quality of coffee over time, keeping it at a certain price. In fact, it hasn't changed in 25 years, while everything else has gone up four or five times - coffee prices should reflect that, if it's properly sourced and prepared by a good barista on a good machine.

"Not to fool people, but to reflect the quality of the product you're selling."

Source/Translated from: https://www.telegraph.co.uk/money/consumer-affairs/battle-italy-one-euro-espresso/