Future prices of espresso equipment

[HB]

Today I read an article in one of those financial newsletters about the US exchange rate:

The U.S. dollar fell to a record low against the euro for the third straight trading session as investors, concerned with the outlook for the U.S. economy, price in further policy easing from the Federal Reserve... Lower interest rates [are expected to] dampen the appeal of dollar-denominated assets among global investors.

Most of the HX espresso machines reviewed on this site sell for $1200-$1600, a sizeable chunk of change. With the increase in fuel costs and raw materials like steel and copper, I wonder if the prices will rise faster than other consumer goods or will manufacturers be forced to make compromises to stay within a certain price point (e.g., lower quality components, lower grade steel, more plastic, etc.).

What do you think the future holds for espresso equipment prices?

[darrylr]

Commodity price increases will affect most appliance categories the same. What will cause espresso equip to rise in price faster than many other categories is the falling dollar. Most of the machines are imported.

Darryl

[terrakeramik]

We would expect the weak US dollar vs. Euro and other foreign currencies to have an impact not only on espresso machines, but also espresso gear imported from Europe (tampers, pitchers, cups, etc.). From a low of 0.85 in early 2001 to a high of 1.35 now, the Euro has strengthened by 60%! vs. the US dollar. Even in the past year, the Euro has advanced from 1.15 to 1.35, which is still a 17% increase. Manufacturers will be unable to hold prices (unless they reduce cost of components, which may be possible with espresso machines, but not with some of the espresso gear).

[Jacob]

You should consider shipping overseas

[HB]

Manufacturers will be unable to hold prices (unless they reduce cost of components, which may be possible with espresso machines, but not with some of the espresso gear).

Good point. I've noticed tamper price increases too. Some premium priced tampers go for $70 and up (e.g., Coffeelab Design, Espro, Espressocraft). At one time Reg Barber tampers were considered pricey, now they're midrange!

[chris]

Even in the past year, the Euro has advanced from 1.15 to 1.35, which is still a 17% increase.

The Euro was at 1.415 yesterday, an all time high. The day of 1.35 has been history for several months.

[terrakeramik]

The Euro was at 1.415 yesterday, an all time high. The day of 1.35 has been history for several months.

Actually, the Euro exchange rate was 1.3580 on September 4, 2007 (3 weeks ago) according to the European Central Bank.

[chris]

Thanks for that link, that is a real nice site to view currency exchange rates. I knew it was out of control I just brought in 450,000 Euros worth of equipment and the best rate I was able to lock in was 1.393. It was pretty hard to swallow and in the past week it broke 1.4.

[HB]

Actually, the Euro exchange rate was 1.3580 on September 4, 2007 (3 weeks ago) according to the European Central Bank.

Thanks for the link, that site has a very slick user interface for graphing exchange rates:


USD vs. Euro: The journey from parity to paltry

[terrakeramik]

It was pretty hard to swallow and in the past week it broke 1.4.

Chris, we totally sympathize as we are importers of Swiss espresso gear and have seen the Swiss franc appreciate vs. the US dollar and we are trying to hold prices heading into the year end holiday season, but as you said it is tough.

[Everman]

Prices will probably outpace CPI due to weakness of the dollar, increasing labor costs, energy costs, raw materials. I'm glad I went with equipment on the high end side because now it's all quite a bit more expensive than what I paid.

Things aren't looking so bad for Canadians though.

[cedar]

Unless you are a Canadian earning a living in the US.

[Everman]

Right, Canadians who's assets are denominated in Canadian Dollars. Many do hold their assets in US dollars.

[Jarno]

If prices were purely a function of of currency exchange, then we should start seeing price differences between domestic manufacturers and imports in everything, not just coffee equipment. Otherwise, I believe that the generalized inflation that we see is likely due to increased energy prices (oil, gas, electricity, etc) which affects all manufacturers.

[CoffeeOwl]

the prices will drop.
There are many machines very similar to each other, but then the ones which satisfy the market's expectations are overpriced and their producers will have a hard time to sell more then just a few.

[Marshall]

The only question is when will the Italians start shifting production to China, the Chinese hire or partner with some Italian expertise and make their own, or both.