Happy Nice Mall

Coffee roasters have a problem. The cost of the beans they import has soared this year, and roasters, from grocery stores to cafes to those looking for a daily latte, are worried about whether their customers will tolerate the higher prices.

Extreme weather has damaged crops in Brazil, the world’s largest coffee exporter. related to the pandemic shipping bottlenecks and political protests that halted exports from Colombia and increased the cost of beans by about 44 percent in 2021.

It’s not yet a problem for coffee giants Starbucks or Nestlé, which buy their supplies long in advance and won’t have to deal with price spikes for a year or more. But some small roasters have already had to raise prices, and others are worried about alienating consumers.

“These increases make me nervous because one of the main principles we’re working on is being able to produce specialty coffees and keeping prices affordable,” said Quincy Henry, co-owner of Campfire Coffee in Tacoma, Washington. In March 2020 when the epidemic started. “It made me think about how we would survive.”

Mr. Henry may have to raise prices or cut costs elsewhere, such as using cheaper ingredients to roast the coffee. He said if he decides to charge more than the current $4.39 for his 12-ounce latte, he needs a price that “won’t scare people” as the economy recovers.

“We are still at a stage in the pandemic where people are price sensitive,” he said.

Mr. Henry remembers that Brazilian Arabica beans were the cheapest he could buy, locking them in at $1.90 per pound. His last order from the same importer in late July cost $2.49 per pound.

Behind this increase is the increase in bean prices, which will be delivered to the roasters months later. Traders call them “coffee futures” and they form a base for buyers around the world. A pound of Arabica beans, which typically cost between $1.20 and $1.40 in the futures market, hit over $2 at the end of July, the highest since 2014. On Wednesday, the price of coffee futures was $1.84 per pound.

Prices soared above $1.40 in late April during the political weeks. Protests rock Colombia, the world’s third largest coffee exporter. exported country 345,000 60 kilogram coffee bags That’s just one-third of its regular monthly shipment in May, according to data from the nonprofit National Federation of Colombian Coffee Growers.

Colombia’s exports have since rebounded, but exports from other major producers such as Vietnam have slowed due to shipping bottlenecks as the global economy tries to reopen after a one-year lockdown. Analysts say the scarcity of shipping containers has curtailed exports and led to a sharp increase in the cost of shipping.

Jeff Taylor, co-owner of Bird Rock Coffee Roasters in San Diego, said shipping bottlenecks delayed his usual purchase of specialty Arabica beans from El Salvador by about a month and a half. So he had to buy smaller quantities of coffee in the United States as a temporary solution. Mr. Taylor has yet to raise prices, but he hopes to raise them by the end of the year.

The real question is what will happen to the supply from Brazil. country every year Exports 34 million bags of coffee beans On average, it has suffered a series of climate shocks – drought and falling temperatures.

Temperatures dropped below 27 degrees Fahrenheit last month, about half of normal, and the kind of cold that can damage or even kill coffee trees.

“A severe cold frost normally burns the leaves and twigs of the coffee tree, which reduces the quality and quantity of coffee bean production,” said Kevon Rhiney, an assistant professor in Rutgers University’s geography department where he specializes in the coffee industry.

July is also the start of the wildfire season in Brazil. After that this year’s drought — the worst in nearly a century in some parts of the country — can be devastating.

Mr Rhiney said if the damage is bad enough, growers may need to “stump” their trees or cut them down to the base, which means it will be three years before the next harvest. If they only need to prune the branches, the harvest can be delayed for a year.

Often the decision depends on whether the grower can pay someone to prune or log the trees. Doing nothing means risking constantly bad harvests that may fluctuate in the global market.

Salomón Shamosh, CEO of Boicot Café in Mexico City, buys his coffee only from Mexico, but said prices there have increased due to problems in Brazil.

“There is so much demand for coffee in the United States and Europe that Mexican distributors are raising their prices,” said Mr. Shamosh. “We have to pay for it,” he added, because if they don’t, “then the product won’t stay in Mexico.”

The cost of coffee beans from the Mexican states of Veracruz, Oaxaca and Chiapas has risen between 10 percent and 15 percent in the last three months. Mr Shamosh said Boicot Café may have to raise the price of its cold beers, which start at 49 pesos, or about $2.50, by January.

Producers in Brazil will decide what to do next month until the end of this year’s harvest season, and what happens next will determine whether even the largest producers can stop price increases.

“By September we will find out how the damage will affect next year’s crop,” said Kona Haque, head of research at agricultural goods trader ED&F Man.

If prices stay high long enough, Even Starbucks and Nestlé will have to consider raising prices, but they are likely to resist.

“Fryers will think twice if they pass this cost on to consumers and don’t affect consumption,” Ms Haque said. “If they think people are worried about what will happen to inflation, mortgages, or future jobs, then they don’t.”

Kevin Johnson, president of Starbucks, said in an earnings call last month that Starbucks buys coffee 12 to 18 months in advance and buys continuously during the pandemic. Thanks to these upfront purchases and the company’s ability to store large quantities of coffee to hedge against rising prices, “we kept our coverage price locked for the next 14 months,” he said.

Smaller roasters won’t last that long.

Donald Schoenholt, president of Gillies Coffee, a Brooklyn merchant who has been around since before the Civil War, has increased the prices he receives from his customers, mostly small distributors who sell the beans to cafes, hotels, and grocery stores. Many items that sell for $5 to $9 per pound are already 55 to 65 cents more expensive per pound.

Mr. Schoenholt, 76, said he was taking it step by step. Working in the sector since 1963, such price increases beforehowever, he states that this year’s rapid increase upset some of his customers and competitors.

“There is a lot of concern right now,” he said. “Changing costs becomes frustrating and you start making business decisions that you wish you didn’t make.”