Some coffee stalls raise prices as water tariff hike kicks in
A beverage stall at Blk 85, Redhill Lane, Food Centre, has raised its prices by 10 cents per cup. Notices have been placed to inform customers about the price increase. Photo taken on July 4, 2017. Photo: Esther Leong/TODAY
SINGAPORE — Several hot drinks stalls in Redhill and Jalan Berseh have raised prices since the start of this month when the first phase of the water tariff hike kicked in. At Redhill Food Centre, at least seven out of about 10 hot drinks stalls have increased prices by 10 cents, with a cup of coffee now costing S$1.10.
Over at Jalan Berseh’s Gourmet Street coffee shop, prices have also gone up by a similar amount, with a cup of coffee now costing S$1. At some of the stalls, notices have been put up to inform customers that the higher prices took effect on July 1.
While the timing of the price increases coincided with the water tariff hike, the stallholders said the higher price of water was among several factors behind the move. They cited rising costs, in particular rental rates.
The Government announced in February’s Budget that water prices will go up — for the first time in 17 years — in two phases, starting this month. By July next year, water prices will go up by a total of 30 per cent.
Following the announcement, the Government had warned businesses against profiteering from the move. Senior Minister of State for Finance and Law Indranee Rajah, for example, said in a post-Budget forum that the water tariff hike would have a very minimal impact on the price of coffee or tea.
Firms are charged S$2.15 per cubic metre for the portable water that they use, and after the full water price hike kicks in next year, this will go up to S$2.74 cents, an increase of 59 cents.
A check by TODAY at Redhill Food Centre found that Fong You Coffee Stall, 108 Cafe, Xin He Yun Coffee, He’s Devvan Hot & Cold Drink, 113 Cafe Club, Lock Tin Coffee Stall and De Li Cha Shi have raised their prices.
Ms Toh Kim Lian, who runs Xin He Yun Coffee, said the increase was coordinated, after some of the stall owners had met and discussed it. She attributed the move to a rise in “miscellaneous fees”, such as rental, water, electricity and domestic refuse collection fees.
“All the fees increased recently, so we had a meeting and it was decided that everyone would raise their drink prices this month,” said Ms Toh, 48.
Over at Jalan Berseh, Gourmet Street owner Clarence Chia said the small profit made from coffee and tea sales does not cover costs, and even after prices were raised, he could still be making a loss.
“I share the same sentiments as any unhappy customer, but I have no choice. We’ll notify the tenants and customers in advance, and address any complaints,” he said.
Mr Hong Poh Hin, chairman of Foochow Coffee Restaurant and Bar Merchants Association, had previously told TODAY that the water tariff hike will have only a slight impact on coffee shop owners, and it “should not affect the coffee prices”.
In light of the price increases by the stalls, he noted that they have not adjusted their prices for some time, and they could no longer bear the rising operating costs. “While water costs for a coffee shop are quite minimal, rental and salaries are major factors,” he said.
Still, the Redhill Food Centre stalls should not have discussed and agreed to raise prices together — as this constituted anti-competitive behaviour, he said.
“In compliance with the Competition Act, they cannot discuss the prices openly,” said Mr Hong, stressing that the meetings had nothing to do with his association.
Customers interviewed felt that the price increases were unfair.
Mr Ho Siong Pah, a 68-year-old security supervisor, drinks two cups of coffee daily. “I pay 20 cents more every day. How much more am I paying per month? The water fee hike is not a good reason ... it shouldn’t affect our daily expenses this much,” said Mr Ho.
Instead of passing the costs to consumers, coffee shop owners should find ways to save water, such as by using less of it to wash used cutlery, suggested Ms Charmaine Leung, 44, a market researcher.
Nee Soon GRC Member of Parliament Lee Bee Wah had previously suggested bringing back a committee against profiteering to ensure that establishments such as coffee shops do not profiteer by raising prices using water fee hikes as an excuse.
Such a committee was set up in 1994 to look into complaints and feedback on establishments that were allegedly profiteering by using increases in Goods and Services Tax as an excuse.
Speaking to TODAY, Dr Lee said the committee can look into businesses’ claims and work out the sums with them to see if a price increment is justified.
The Consumer Association of Singapore (Case) said that between February and last month, it has received six pieces of feedback from consumers about higher beverage prices at coffee shops.
It has not received any such feedback so far this month, after the first phase of the water price hike was implemented.
Case president Lim Biow Chuan, who is also the MP for Mountbatten, noted that businesses have the right to set their own prices, especially when labour costs have gone up.
However, they should not promote anti-competitive conduct by co-ordinating the price increases, he said. “When owners take (the water tariff hike) as an opportunity to up prices, then consumers must vote with their feet by looking for cheaper alternatives,” he added.
TODAY visited several coffee shops in Chinatown, Commonwealth, Kallang and Sixth Avenue, for example, and there were no increase in prices.
