Coffee Prices in 2011 – Arabica Coffee Shortage

by Dan Harrington on April 9, 2011

Coffee Price Increases in 2011 Due To Rising Worldwide Demand for Fine Arabica Coffee

Coffee Market World Inverstor and Consumer Report: Consumers are paying more and more for their cup of coffee and espresso drinks such as Caffe Lattes and Cappuccinos. The most recent price increase was by Tim Horton’s, Canada’s largest coffee and doughnut chain, which raised prices by about 4.5%.

In recent months there have been a string of high profile coffee price increases by top coffee chains, Roasters and retailers including Starbucks, Peet’s, Caribou Coffee and also McDonald’s and other outlets.

Also announcing price increases was Green Mountain Coffee Roasters known for their popular Coffee K-Cups which are brewed in Keurig single serve brewing systems and sold under numerous brand names including Green Mountain, Caribou Coffee, Newman’s Own Organics, Timothy’s Coffee and Tully’s Coffee.

Yuban and Maxwell House coffees produced by Kraft Foods have also increased in price and this includes instant coffee as well as ground coffee. The J.M. Smucker Company, which markets Dunkin’ Donuts, Millstone and Folgers coffees, has also significantly raised its prices.

Along with fresh-roasted whole bean fresh-brewed coffee people are increasingly taking a liking to a whole variety of other fine coffee beverages including Espresso-based drinks such as the Caffe Latte, Caffe Mocha and Cappuccino made largely with Arabica coffee beans.

Arabica beans also comprise most all of the markets for Organic Coffee (e.g., Fair Trade Coffee) as well as Bird Friendly Coffee and Shade-Grown Coffee.

Coffee Prices in 2011 Going Up Due To Arabica Coffee Shortage continued:

Coffee Price in 2011 Trending Higher Along With a Host of Other Commodities

With coffee prices still trending higher along with a host of other agricultural commodities (including the milk and bread products served at most coffee shops), more price increases in the future seem all but inevitable at coffee shops and restaurants as well as for packaged coffee products sold on supermarket shelves.

Among the problems besetting agricultural commodities are the droughts in Russia and Australia and floods in Australia and on the Canadian Prairies. A recent commodities price report in Canada showed that agricultural products had risen more than forty percent in price in one year.

Rising wheat costs were also driving up the price of pork and beef due to the increased cost of livestock feed.

Arabica Coffee Shortage Leading To Higher Coffee Prices in 2011

Inclement Weather Hurts Coffee Crops Worldwide Placing Upward Pressure on Coffee Prices

One of the reasons for the upward pressure on coffee prices is the inclement weather that plagued coffee crops in major Coffee Growing Countries such as Brazil and Colombia.

Some areas saw the worst rain in decades, and the weather also led to increased outbreaks of coffee plant diseases and pests that harmed large numbers of coffee plants. For example, coffee leaf rust and the broca beetle hurt Colombian coffee production.

Disappointing coffee harvests in Guatemala, Costa Rica, Vietnam, Mexico, India, Uganda, Panama, Tanzania (with its famed Tanzania Peaberry Coffee) and Kenya have also exacerbated the coffee supply situation.

Panama with its now famous Panama Geisha coffee had bad weather and a mold outbreak due to humidity damaging many coffee plants.

Coffee Prices in 2011 – Arabica Coffee Shortage continued:

Emerging Markets Driving Huge New Demand For Arabica Coffee in 2011

Another factor in rising coffee prices is the rapidly growing demand for coffee in emerging markets such as China, Brazil, India and Latin America. Last year’s low production depleted coffee stockpiles creating a shorter supply chain that now leaves the coffee markets vulnerable to any new supply disruptions.

Starbucks CEO Blames Speculative Commodities Trading On Artificial Coffee Price Increases

Coffee futures have doubled in the last year and recently attained a 15-year high. Man industry analysts as well as Starbucks CEO have stated that rampant speculation in coffee markets – as well as oil markets and a range of other commodities – has driven up prices far beyond what the normal supply and demand conditions would warrant.

Today’s inflated consumer prices, they say, is due to the large increase in speculative commodity investing leading many to call for market reform that keeps prices in line with the supply and demand reality.

Whether or not coffee price increases are due to fundamental market forces or are being artificially driven up by speculative trading is a matter of debate. Most believe both are true, with the trading merely exacerbating an already volatile market due to significant supply issues at a time of huge rising demand in emerging markets.

Coffee Demand Expected To Outpace Supply Keeping Coffee Prices High

The rising price of green coffee beans (unroasted coffee beans) on world coffee markets is predicted to continue due to demand outstripping supply, potential crops disruptions due to weather and other causes, and rising commodities including oil which increases shipping and production costs.

At least for 2011 and 2012 there remains a real possibility of a distinct shortage of the higher quality Arabica coffee beans.

China and Brazil Creating Massive New Demand For Coffee Driving Up Coffee Prices in 2011

Many have said that the huge increase in demand for coffee in China is largely due to the up and coming young professionals in the rising middle class who seek to emulate Americans and Europeans.

Brazil is on the verge of surpassing the United States in coffee consumption and is keeping an ever higher percentage of its own crop, more than 50% by 2015, and this affects the world coffee market because Brazil is the world’s largest coffee producer.

India’s coffee demand is rising at about 5% annually, well above the worldwide average of two percent, but still far below China’s estimated twenty percent annual growth in coffee consumption.

It’s no wonder that Starbucks announced plans to open 1,000 stores there while already having more than seventy percent of the market share in China. Starbucks also announced a deal to open stores in India.

Thank You for Reading Coffee Prices in 2011 – Arabica Coffee Shortage and Visiting Gourmet Coffee Lovers! Love Your Coffee and Espresso!

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