Northwest Arkansas Democrat-Gazette
Coffee-bean costs squeeze small roasters
Coffee roasters have a problem. The cost of the beans that they import has soared this year, leaving roasters anguishing over whether their customers, from grocery stores to cafes to people looking for their daily latte, will tolerate higher prices.
Extreme weather has damaged crops in Brazil, the world’s largest coffee exporter. On top of pandemic-related shipping bottlenecks and political protests that stalled exports from Colombia, that has pushed the cost of beans up nearly 44% in 2021.
It is not yet a problem for Starbucks or Nestle, coffee giants that buy their supplies far in advance and will not have to deal with the price gains for a year or more. But some smaller roasters already have had to raise prices, and others expect to — all the while worried about alienating consumers.
“These increases are making me nervous because one of the main tenets that we operate on is being able to make specialty coffee and make the pricing affordable,” said Quincy Henry, a co-owner of Campfire Coffee in Tacoma, Wash., which opened in March 2020 as the pandemic began. “It’s got me thinking about how we’re going to survive.”
Henry might have to raise prices or cut costs somewhere else, such as using cheaper supplies to roast coffee. If he does decide to charge more than the current $4.39 for his 12-ounce lattes, he said, he needs a price that “won’t scare people off” as the economy recovers.
“We’re still in a stage in the pandemic where people are price-sensitive,” he said.
Henry remembers when Brazilian arabica beans were some of the least expensive he could buy, locking them in for $1.90 per pound. His latest order, in late July from the same importer, cost him $2.49 per pound.
Behind that increase is a run-up in the price of beans that will be delivered to roasters months from now. Traders call these “coffee futures,” and they serve as a baseline for buyers around the world.
A pound of arabica beans in the futures market, usually $1.20-$1.40, rose above $2 at the end of July, the highest since 2014. On Wednesday, the price of coffee futures was $ 1.84 a pound. Prices climbed above $1.40 in late April as weeks of political protests rocked Colombia, the world’s third-largest coffee exporter. The country exported 345,000 60-kilogram bags of coffee in May, only one-third its usual monthly shipment, according to data from the nonprofit National Federation of Coffee Growers of Colombia.
Colombia’s exports have since rebounded, but those from other large producers, like Vietnam, have been slowed by shipping bottlenecks as the global economy struggles to reopen after a year of lockdowns. A shortage of shipping containers has restricted exports, analysts say, and led to a sharp rise in the cost of shipping, too.