Coffee News 2011

by Dan Harrington on April 7, 2011

The cost of a cup of coffee keeps going up in 2011 as worldwide the price of coffee has doubled in the last year.

Due to the rise in the price of green coffee beans (unroasted coffee beans), all of the major coffee companies and chains have raised their prices in the last year including Starbucks, Peet’s, Caribou Coffee and Green Mountain Coffee Roasters, the J.M. Smucker Company (Folgers, Dunkin’ Donuts and Millstone), and Kraft (Yuban and Maxwell House).

Consumers have now seen significant price increases in packaged coffees as well as coffee in cafes and even instant coffee.

Still it has only amounted to pocket change for the average consumer’s cup of coffee or Caffe Latte, and perhaps $1 to $2 dollars more on the bag of coffee beans or ground coffee.

Arabica Coffee Prices Likely To Continue Rising in 2011

Yet many in the coffee news business in 2011 forecast that prices will continue to rise, particularly for Arabica coffee beans which are desired for the specialty coffee market and high end coffee chains like Starbucks and Peet’s, and for example, all of the coffee sold by Green Mountain Coffee Roasters.

In 2011 there is somewhat of an Arabica coffee shortage due to disappointing coffee harvests, supply disruptions, spiraling coffee futures prices making it hard for importers and exporters to afford margins to protect their investments, and rapidly increasing demand from emerging markets like Latin America, China, Brazil, Russia and India

Coffee Demand Strong and Growing Worldwide

The United States and Europe sustained a very strong demand for coffee during the recent years of economic downturn so a rebounding economy is likely to create more demand in these countries. Meanwhile the main coffee news in 2011 is that emerging economies have been increasing their coffee demand rapidly, much faster than the worldwide average of 2% growth annually.

Coffee News 2011 continued:

China Leads In Growth Rate for Coffee Consumption – Huge Emerging Market Taking A Liking To Gourmet Coffee

China’s demand for coffee is estimated at about 20% each year with Starbucks retaining more than 70% of the market share.

The increasing wealth in China and the growing middle class, as in other emerging markets, is creating more disposable income for affordable luxuries like fine whole bean fresh roasted and fresh-brewed Arabica coffee or Cappuccinos, Mochas or other espresso-based specialty coffee drinks.

Coffee News continued: New Breed of Gourmet Coffee Lovers Growing Worldwide

Coffee chains like Starbucks and Peet’s seem to have created a whole new breed of gourmet coffee lovers whose numbers keep growing.

In Brazil, the world’s largest coffee producer and also a major Arabica coffee grower, they should surpass U.S. coffee consumption by 2012 and by 2015 they will be keeping more than 50% of their own coffee crop just to supply their own demand.

Emerging markets are developing a taste for fine coffee like never before. Some analysts say China’s rising demand is linked to the desire of the up-and-coming young professionals and their desire to emulate Europeans and Americans.

Lower Coffee Production One of Numerous Factors Creating Higher Coffee Prices in 2011

Meanwhile coffee supplies have been beset by numerous problems including inclement weather, coffee diseases and pests and other difficulties, and coffee price spikes have been exacerbated by speculative trading in futures with huge amounts of money from funds, driven by an easy-credit, easy-money policies of the U.S. Federal Reserve (as well as other governments).

In the U.S. this has led to massive new debt and a weakened U.S. dollar which effectively raises commodity prices for all Americans across the board. Overlaying the issue is the rising price of oil which makes everything go up and price due to increased production and shipping costs.

Inclement Weather and Other Problems Hindering Coffee Production By Top Coffee Growing Regions

Many have blamed global climate change in general for causing erratic weather in Coffee Growing Regions in 2010 and 2011 leading to major crop damage.

In particular Colombia, Brazil and Vietnam suffered disappointing coffee harvests due to bad weather, with the high humidity causing coffee disease and pest outbreaks at ever higher elevations. Other areas seeing lower production include Mexico, Panama, Kenya, and India, Costa Rica, Guatemala, Uganda

Coffee farmers in central and western Kenya have been pushed off their land due to real estate pressures and coffee plants have been uprooted.

In other areas coffee farmers have been seeking higher elevations to grow Arabica which thrives in a cooler climate which keeps moving upward as temperatures in Coffee Growing Regions have risen one and one-half degrees in the last 25 years, according to the International Coffee Organization.

Coffee News: Fair Trade Coffee and Organic Coffees Add Premium To Coffee Prices in 2011

In addition to higher coffee prices created by market conditions, some coffees such as Bird Friendly Coffee, Shade-Grown Coffee, and Organic Coffee (including Fair Trade Coffee) are becoming more popular even though the certifications typically add from $1 to $2 per pound to the price of the coffee.

Past Boom and Bust Cycles In Coffee Markets Make Farmers Wary of Increasing Production

Some industry analysts note that higher coffee prices will benefit the farmers and in turn lead to a higher quality of production. However in Brazil and other regions the governments are wary of encouraging massive production increases due to previous boom-bust cycles that left them high and dry as coffee prices plummeted.

Furthermore coffee plants take three to five years to mature and begin producing so any new investment in production now will not come to fruition soon enough to affect the current large and growing demand at a time of lower supply, causing a fundamental shift in coffee markets in which demand is outpacing supply.

Thank You for Reading Coffee News 2011 on Gourmet Coffee Lovers! Love Your Espresso and Coffee!

Leave a Comment

Previous post:

Next post: