“Arabica-coffee prices are at nearly their lowest point since June,” the Wall Street Journal reports, “and market conditions point to still lower prices ahead.” The Brazilians (who grow a third of the world’s coffee) are responding by storing their beans, not selling them. I just hope it’s stored somewhere dark and cool, you know, for freshness.
“But Colombia and Central American growers kicked off their harvests last month,” Journal correspondent Leslie Josephs explains, “and as the influx of supply pushes prices lower, Brazilian growers may try to sell before the prices fall too far…. The harvest in Brazil is complete, but Colombia and Central America started picking their beans last month. As those beans are harvested, growers there are expected to sell because they aren’t as well-financed as their counterparts in Brazil.”
What does this mean for us? At the supermarket, coffee bag prices have already slid somewhat—at least for Kraft (Maxwell House) and Smucker’s (Dunkin’ Donuts and Folger’s). But don’t expect serious discounts since coffee consumption has also increased, offsetting the drop. My colleague Jonathan V. Last, an avid Starbucks watcher, doesn’t expect a decline in arabica prices will translate into lower costs for the Seattle-based chain. The company has some of the priciest coffee (dairy costs are also a major factor) and conducts increases in increments after several years—with price hikes across the menu board. The rest of the coffeehouse chains tend to follow.
UPDATE: The Washington Post reports that Starbucks now has a coffee that costs $7. It’s called Geisha.
Photo of Trader Joe’s Smooth & Mellow Blend by Ragesoss