Coffee Bean Prices Hit Highest Mark in Three Decades
CHICAGO -- Consumers got a jolt this week with news that the price of coffee was hovering near $3 a pound, the highest price in more than three decades, forcing many coffeehouses to consider raising prices or cutting services, the Chicago Tribune reported.
Bad weather in the world's top coffee growing regions, a weak dollar and pressure from emerging coffee drinking markets are putting pressure on the industry, which saw coffee beans trading Tuesday at about $3 a pound -- just below its peak of $3.22 a pound on Friday.
The last time coffee prices were higher was in 1977 after bad weather in Brazil, one of the world's leading coffee producers, destroyed more than half of the country's coffee crops.
"We've been hit hard for close to a year now," Martin Dietrich, owner of Kean Coffee in Southern California, told the newspaper. "I can't always ask what I need to because I get push back from my guests, from my customers. So I have to take a margin hit."
The price of coffee beans represent about 15 percent of the actual cost of a cup of coffee at most small coffeehouses, with food, labor and operating costs making up the remainder, said Ross Colbert, the global strategist for beverages at New York-based financial services provider Rabobank. That percentage, though, is significant enough to have forced small coffee shop owners to have hiked prices two or three times over the past year, Colbert said.
Big-time coffee companies such as Starbucks, as well as the corporations behind Folgers and Maxwell House, also hiked prices over the past year to keep up with the rising cost of beans.
The vast majority of coffee consumed in the U.S. is imported. Hawaii is the only coffee-producing state and cannot supply enough to meet the nation's needs, the report stated.
Though Colbert said demand for coffee would diminish somewhat at the conclusion of the coffee growing season in May, neither he, Carlson or Dietrich expect prices to significantly drop then because of the length of time it takes for a coffee crop to mature.
"It's going to be another year or two before some of the production catches up with the market," Dietrich said.