Coffee Rises on Speculation U.S Dollar Devaluation
Java jolt! Coffee prices are boiling over
By Aaron Short
Your daily cup of black coffee could soon leave you in the red.
Two big-time Brooklyn roasters have raised their wholesale prices by about $1 per pound after the cost of unroasted “green beans” tripled to roughly $3 per pound in a mere five months.
Porto Rico Coffee Roasters of Williamsburg and Gillies Coffee of Park Slope informed their thousands of customers — including scores of Brooklyn restaurants and coffee shops — that their prices would rise in the wake of the highest wholesale bean prices in 14 years.
“We are not responsible for the increases in the green coffee market, but we have done our best to use dollar-cost-averaging to bring our coffee prices up slowly,” said Porto Rico founder Peter Longo. “Truth be told, we see more increases on the horizon.”
The cause behind the rise in coffee prices is enough to give you a caffeine headache:
Coffee is traded on the futures market in U.S. currency and the dollar’s value has declined in recent years — and many coffee-producing countries have been holding onto their supply to create artificial scarcity.
But the most significant reason for the price jump has been increased demand in China, India, Russia and Brazil — countries with a growing middle class.
“The first thing that a growing middle class wants to do is smoke Marlboros, wear Levis and drink coffee,” said Gillies Coffee President Donald Schoenholt.
Schoenholt has marked up his per-pound prices for Columbia Supremo, a popular dark roast, from $6.22 to $7.53. But he claimed that he was eating some of his profit to not scare away customers.
“The worse thing to happen is volume of business goes down, then your unit overhead costs increases,” said Schoenholt. “You can overcome eating part of margin if you can get your volume high enough.”
So far, few Brooklyn coffee shops would admit to raising prices of lattes and espressos.
A barista at Gorilla Coffee in Park Slope said the shop increased the price of its drip coffee by a quarter, and reduced the size of its coffee beans in bags from 16 to 12 ounces two months ago, but there were no other increases on the horizon.
And managers at Ozzie’s Coffee in Park Slope, Heights Café in Brooklyn Heights, and Oslo Coffee in Williamsburg said that they would absorb any cost increases.
At Oslo, the cheapest packaged coffee is the house blend, “Thor,” which costs $12 per pound and the average espresso drink is about $3.
“I have pretty low overhead, so I have room to take a hit,” said Oslo’s John Bettancourt.
But Longo predicts that most restaurants and coffee bars will have to raise their prices — eventually.
“The only people who can absorb it are those who are already ripping off the public — those who have turned coffee into wine,” he said. “It’s not reality. It makes me crazy. There’s no reason for it.”
editors note: the deflating dollar is causing hoarding of commodities. Everywhere in the world countries are hoarding commodities in anticipation of higher prices.
Your cup of morning joe as well as your tank of gas is costing you more everyday because of QE2 which leads to hyperinflation on goods purchased DAILY.
Hyperinflation is complete loss of confidence in currency. The U.S. Dollar as the world currency reserve is the reason for worldwide commodity inflation.