Sunday, March 27, 2011

Coffee prices on the rise

That morning cup of Joe is not the business that used to be.
Wholesale prices of coffee have nearly doubled in the last year, surpassing highs last seen in 1977 and led many companies to raise retail prices 10 to 25 percent.
Starbucks, Folgers, Dunkin 'Donuts, Green Mountain Coffee Roasters Inc., among others, have succumbed to pressure.
In the short term supply problems related to the climate seems to be the result of recent increases, according to industry group IBISWorld research.
In Colombia, a major U.S. supplier, a fungus caused by rain and the heat has killed many of the country's crops. The disease will take some years to go, it is probable delay in the future growth of crops, said analyst IBISWorld Nikoleta Pantev.
Coffee beans are just one of many commodities to rise, however.
Weather disasters have caused a shortage of products such as tomatoes and lettuce.
supply problems, including growing demand from developing countries, have pushed up the cost of cocoa, sugar and cotton at record levels. And then there is oil, which is increasing chaos in the Middle East, increasing transportation costs for almost everything.
Finally, coffee companies and analysts say that speculators in the market, rather than the supply or demand is to blame for most of the increases.
"It all comes together, and we finally feel consumer prices," said Pantev.
Last week, Starbucks Corp. announced it is increasing the retail prices paid for coffee packaging up to 12 percent to cope with higher costs for grain. Grocers and other retailers have to decide whether to pass along the increase to consumers.
Starbucks also raised the price suggested by stores of $ 9.99 to $ 8.99 for a package of 12 ounces of Starbucks coffee, and $ 7.99 from $ 6.99 for Seattle's Best.
In a statement, the company said it saw a steady increase in the market and determined that he could not fully absorb the costs and should make a decision. Howard Schultz, Starbucks chairman, president and CEO, has blamed speculators for the ears.

Coffee prices

Listed below is a composite index of the average monthly coffee bean price per pound. The index includes arabica and robusta coffee futures trading on U.S. and foreign markets.

Feb. 2011: $2.16

Jan. 2011: $1.97

Dec. 2010: $1.84

Nov. 2010: $1.74

Oct. 2010: $1.62

Sept. 2010: $1.64

Aug. 2010: $1.57

July 2010: $1.53

June 2010: $1.42

May 2010: $1.28

April 2010: $1.27

March 2010: $1.25

Feb. 2010: $1.23

Source: International Coffee Organization


Meanwhile, JM Smucker Co., which sells Folgers and Dunkin 'Donuts, has raised prices several times last year. Sara Lee Corp., Kraft Foods Inc. and Green Mountain Coffee Roasters Inc. have also raised prices.
Dunkin 'Donuts spokesman Andrew Mastrangelo said the decision to increase prices of the drinks are made by individual franchise owners. He added that the stores have tried to absorb much of the gains they could.
"The franchise owners have kept their prices stable for three years, despite rising prices," he said.
In the Northeast, the adjusted prices of coffee shops Stewart last fall, and grew up in bags of coffee prices in recent months, said spokesman Tom Mailey.
As the prices of wholesale have steadily increased, the local chain based has made necessary adjustments made.
"Many places have a kind of holding their breath, waiting to see if we hit a peak and back down," said Mailey.
"You choose to give some of their profit margin, and finally reaches a point where you have to change their prices."
Mickey Hayes, who owns two locations in Queensbury cool beans and is opening a third in South Glens Falls, said he wonders about the reasons for the increase.
"You never know what percentage of it is supply and demand and climate, and what percentage is manipulation," he said.
So far, it held the line on prices of fresh coffee beans, despite the increase in points over the business of buying food.
He said it is unfair to pass the temporary fluctuations in the client, and never adjusted to 10 percent of its menu items at a time.
However, for most companies is a matter of when, if you do not have to share the increasingly higher costs to consumers.
"If commodities continue to rise and costs continue to rise ... to work hard to keep a lid on prices, but eventually has to be beaten," said Hayes.
The Associated Press contributed to this report.

(Source: http://poststar.com/business/local/article_515100d6-57c5-11e0-8dc2-001cc4c03286.html)

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