Price increase brewing?
Posted Aug 24, 2010 03:17:38 AM.
This article is more than 5 years old.
The soaring cost of coffee beans has some suppliers suggesting a cup of joe is about to cost you more. But two of Canada’s biggest coffee chains say that’s not the case. Both Tim Horton’s and Starbucks say they have no immediate plans to increase the price of a cup of coffee.
Kevin Daw, president of London, Ontario-based Heritage Coffee Company calls this “the strangest market that I have ever seen in my life.” Daw tells 570’s Gary Doyle Show the price is being pushed up by speculators “as they (prices) are in a lot of different commodity indexes.”
“They’re trying to capture what they perceive to be an oncoming shortage in coffee due to too much rain in Colombia,” Daw explains.
The world price for “green coffee”— the unroasted beans fresh off the plant – is up more than 30% in the past 10 weeks. Daw says that’s bound to put the squeeze on suppliers. “For us as a coffee company, we buy coffee regardless of where it goes (price-wise). We’ve got to buy for our consumers.”
Daw says “shrinkage” results in a loss of about 15% of the product, which means it requires more than a pound of green coffee beans to produce a pound of finished coffee. “If you figure a pound of coffee — depending on how strong you like it — produces 50 cups, and you have to pay an extra dollar (for that pound), then you’ve gone up two cents a cup.”
While the retail chains are trying to downplay any cost concerns, it will be more expensive to brew your own java. Kraft Canada says it’s set to raise the price of its popular Maxwell House, Nabob and Sanka brands for the second time this year.
The increases, to take effect October 3rd, would boost the price of its roast and ground coffee by as much as 12% and instant coffee by 16%.
The latest research suggests Canadians drank an estimated two billion cups of coffee last year.
