On Wed Dec 15 2010
Kraft Canada boosting coffee price
will be paying more for store bought coffee in the New
Year, as a shrinking global supply and increasing demand
continues to push up the price.
recent spate of extreme weather in Colombia paired with
a growing taste for higher quality beans and a diminished
global stockpile could result in a 30 to 50 per cent
spike in prices, according to one U.S. analyst.
Wednesday Kraft Canada confirmed that the company’s
Maxwell House and Nabob Roast & Ground coffees will
go up in price on January 30, 2011, the price of roast
and ground coffees will go up 7 to 10 per cent. Distributors
were informed of the boost a few weeks ago, the company
Canada said the increase “stems from the significant
increase in world prices for green coffee.” The company
boosted prices twice on popular coffee brand products
in 2010, the last increasing roast and ground coffee
by as much as 12 per cent and instant coffee by 16 per
of the border Kraft Foods Inc. cited the same cause
was behind Wednesday’s boost for Maxwell House and Yuban
coffees, with roast and ground coffee prices up 12 per
cent and instant coffee prices up about 4 per cent.
Hackett, president of Hackett Financial Advisors, Inc.,
a brokerage firm specializing in agricultural commodities
in Boynton Florida, predicts “actual coffee prices”
or the cost of beans and cups of coffee could rise anywhere
from 30 to 50 per cent by 2012.
closed on the U.S. futures market for (U.S.) $2.175
a pound, about double the cost reported the same time
last year. That price is well below historic highs of
(U.S.) $3.35 per pound reported in 1977.
said based on current price increases a conservative
estimate would be (U.S.) $4 per pound by the end of
addicts should try to relax. Tim Hortons has no immediate
plans to charge more.
Tim Hortons books its coffee contracts for at least
six months at a time, which protects its restaurant
owners and customers from jumps in worldwide future
markets,” said a spokesperson in an email.
said no one was available to comment.
shortage is being caused by several factors, but poor
weather in Colombia is key, he said.
rainstorms have resulted in loss of life and heavy damage
to the current crop. Last year production was down 35
per cent and it was hoped they would recoup those losses
in 2010, said Hackett.
is the largest producer of high-quality, mild washed
Arabica. “That is your Starbucks kind of coffee,” said
Hackett. “The shortest supply is in that kind of coffee
which is in the highest demand.”
previous years stockpiles of coffee in Brazil were released
to relieve pressure when the market became too tight,
but those supplies were depleted this year, said Hackett.
said because of the massive profits large companies
like Starbucks make selling coffee most can afford to
eat cost increases until prices stabilize.
Hardy, a professor emeritus of marketing for the Richard
Ivey School of Business, said the smaller increase like
the one from Kraft are unlikely to impact consumer habits.
a board member for Williams Coffee Pub, noted that coffee
is a central part of our social habits and a slight
price hike won’t deter us from buying.
said if the price for over the counter coffee was going
to rise in Canada, the cycle would start with Tim Hortons.
think they are the dominant buyer and dominant retail
chain . . . they would be the price setter for most
prices do rise above $4 and a hefty price hike is passed
down to consumers people may start rethinking how much
they drink and from where, he said.
companies, like Starbucks, don’t have a great deal of
room to manoeuvre, he said.
are already near the ceiling of price tolerance.”