March 18, 2008 in Business

Buzz about coffee cost

Jerry Hirsch Los Angeles Times
 
Los Angeles Times photo

Sarah Morris gets a cup at Groundwork Coffee Co. last week in downtown Los Angeles. For some aficionados, purchasing coffee will continue regardless of the cost. World coffee prices have climbed 23 percent in the past six months. Los Angeles Times
(Full-size photo)

LOS ANGELES – Lisa Spruill is fighting inflation with a secret stash of coffee. The Los Angeles office building manager has six cans of Don Francisco coffee squirreled away, all purchased with double coupons at local supermarkets in recent months.

Spruill’s micro-investment is paying off as she and other Americans find themselves coping with the increasing price of java – whether it’s at the supermarket or the corner coffeehouse.

“If I hadn’t done that, I would have to reduce my coffee drinking,” Spruill said.

Breakfast is getting a lot more expensive. Coffee is now up there with other increasingly expensive items such as milk, bread and eggs. The cost of groceries is rising at the fastest rate since 1990, according to the federal Bureau of Labor Statistics.

The increase for coffee started with Starbucks raising drink prices in July. Other coffee chains followed suit. The big supermarket brands, including Folgers, Maxwell House and Chock full o’Nuts raised prices twice in the past two months. World coffee prices have risen 23 percent over the past six months.

It’s not that there’s a sudden coffee shortage.

A weak U.S. dollar that makes imported coffee more expensive and speculative investments in all commodities, including raw (green) coffee, wheat, oil and platinum, have sent prices up.

At the Ralphs supermarket in Seal Beach, a typical package of ground coffee, say Folgers’ 13-ounce Classic Roast, recently sold for $4.89. A 11.5-ounce can of Maxwell House French Roast went for $4.69. Those prices are up about $1 from a year earlier.

Large coffee roasters including Folgers owner Procter & Gamble Co. and Kraft Foods Inc., which sells Maxwell House, said they are raising the price they charge supermarkets and mass retailers for their coffee by about 7 percent, or 20 cents for containers in the 11- to 13-ounce range. This was the second round of price increases this year. In February, Procter & Gamble and Kraft added 15 cents to what they charged supermarkets for a typical can of ground coffee. Combined, the two increases raised Kraft’s suggested retail price for Maxwell House by almost 10 percent to $3.94.

“There is nothing fundamentally that suggests coffee should be higher, but due to the volatility in the stock market, the prices have remained high because the dollar has been devaluating against other currencies,” said Jay Isais, coffee buyer for Los Angeles-based Coffee Bean & Tea Leaf.


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