Cafés legal collapse: Century-old roastery succumbs to debt
The popular coffee brand Cafés Legal has declared bankruptcy after 173 years of operation. On December 17, the commercial court in Paris ordered the company's liquidation. Over 100 employees are set to lose their jobs.
According to the French daily "Le Figaro," the decision by the Paris commercial court to declare Cafés Legal bankrupt came after they could not find an investor who could save the company.
The French coffee roastery becomes part of history
Cafés Legal was established in 1851 in Le Havre, Normandy, and was one of the oldest coffee roasteries in France. In 2022, the company was taken over by Michel Ohayon, a businessman from Morocco, but just a year later, it was sold to the FnB Private Equity fund. Despite the change in ownership, the company's problems only deepened.
As noted by "Le Figaro," the main reason for the bankruptcy was the sharply rising prices of coffee beans. The company planned to achieve revenues of 60 million euros ($88 million CAD) in 2023 but ended the year with revenues of 45 million euros ($66 million CAD) and a debt reaching 50 million euros ($73 million CAD).
On the eve of the verdict issued on December 17, Cafés Legal employed 105 people. All individuals will lose their jobs.
Beans are the most expensive in almost half a century
The prices of Arabica coffee increased by 80 percent this year. As we wrote in WP Finanse, beans are currently more expensive than in the record year of 1977, when snowfall destroyed plantations in Brazil.
The main reason for the price increase is unfavourable weather. In Vietnam, droughts and heavy rains threaten the Robusta crop. Meanwhile, Brazil experienced the worst drought in 70 years in August and September, followed by heavy rains in October.
For several months, coffee producers have been absorbing the rising production costs. However, these increases are so severe that soon, they will have to pass them on to consumers. Consumers can expect coffee prices to rise at the beginning of 2025.
This trend is expected to continue "for a while" because bean stocks are low, and their prices are rising. In November, the portal money.pl reported that Nestlé intends to raise coffee prices and reduce product sizes to protect margins.
