Wake up and smell the price jump Coffee: It's the second biggest commodity in the world -- and, thanks to shortages, a morning cup's getting a lot more expensive.

March 13, 1997|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Coffee drinkers could get an unexpected jolt from their next cup.

Whether home-brewed or topped with whipped cream and cinnamon at a cafe, the world's second-biggest commodity -- only oil is bigger -- is about to become more expensive.

The wholesale price of unroasted coffee has nearly doubled in the past few months. As of yesterday in the Baltimore region, convenience stores, specialty shops and supermarkets had begun boosting prices -- or bracing for possible increases -- as much as 45 cents to 60 cents per pound.

"We've got a real mess on our hands," said Nick Constantinides, president of Baltimore-based Eagle Coffee Co. Inc., a 75-year-old coffee manufacturer and nationwide distributor, which imports its beans directly from Brazil and Colombia.

"We'll be seeing big increases on the grocery shelf, and it may even possibly affect the price of coffee in restaurants, hotels and eating establishments," he said.

Coffee prices fluctuate based on coffee futures. For May, those futures were trading around $2 a pound on New York's Coffee, Sugar and Cocoa Exchange, the highest since October 1994.

Rain damage to crops in Colombia, as well as a shortage in the projected yield in all of Central and South America, has left inventories in the United States at 20-year lows. A shortage of better-quality coffees has sent those prices skyrocketing, to more than double, Constantinides said.

As prices continued to rise -- after remaining stable for nearly three years -- most coffee sellers used up their available stockpiles and hoped the market would level off, said Tom Thompson, co-owner of the Coffee Mill, a specialty coffee retailer and wholesaler with two locations in the city. Prices on his gourmet coffees have gone up about $1 a pound, he said.

"Our customers will continue to buy coffee, but they won't be able to buy as much as they had," he said. "Coffee's the fuel for a lot of people."

At the Early Edition, a cafe north of Pikesville, the price of a small regular coffee went up this week for the first time in two years, from 85 cents to 95 cents. For now, customers can still get a cappuccino for $1.85, owner Preston Beall said.

"That will stay the same until the price is raised" by the supplier, Beall said. "I expect that to happen."

But he also expects the customers to keep coming.

"You don't need a driver's license to buy coffee," he said, referring to the new requirement that retailers check cigarette buyers' IDs. "It's the last legal high."

Coffee drinkers will be more likely to cut back rather than kick the habit, especially those who count on a caffeine buzz.

"It's a necessity," said Olutayo Ojolayo, a 30-year-old auto mechanic who drinks coffee while working on cars. "If I need it, I would buy it. Twenty cents more, 30 cents more, it's negligible."

Perhaps, but still unreasonable, said Ralph Dettor, president of Harbor Construction Co., while stopping in for coffee yesterday at Dunkin Donuts on York Road in Towson, where manager Jack Patel said he hoped not to raise prices.

"It's like food. Everyone complains, but there's not much you can do; you have to eat," Dettor said.

Producers of both Folgers and Maxwell House have responded with price increases of at least 20 percent. On Monday, Procter & Gamble Co. raised retail prices on the Folgers brand by 15 cents, to $2.86 for 13-ounce cans -- just a week after announcing a 45-cent increase. Philip Morris Cos. matched P&G's increase last week with an identical price rise on its Maxwell House brand.

Though those companies are among the biggest suppliers to Giant Food, the area's largest grocery chain, it hasn't decided whether to pass increases averaging 45 cents per pound to the consumer, said spokesman Mark Roeder.

The Baltimore Coffee & Tea Co., a wholesaler in Timonium with a coffee "factory outlet," has just begun passing on increases of more than $1 per pound to customers, who are now paying 50 to 60 cents more per pound, said co-owner Norman Loverde.

"If history is an indicator, if this coffee goes too high, people will cut back," Loverde said.

Eagle, the Baltimore-based distributor, plans to raise prices in steps starting next week. Until now it has allowed its supermarket clients to buy coffee at current prices in larger quantities.

While other large manufacturers have already raised prices at least once, Eagle has been able to hold off until now because of the large quantities it imports and sells wholesale to grocery chains, gourmet shops, restaurants and hotels.

Increases to those customers could reach as high as $1 to $1.50 per pound over a period of months, an increase of about 2 cents per cup for the consumer, Constantinides said.

If that happens, "demand will drop slightly," he said. "I think people really need their coffee, and they're not willing to give it up. It's still a cheap beverage per cup."

But it's not the only one, one shopper noted yesterday as she bought a can of Folgers on sale at SuperFresh.

When coffee prices increased two years ago, most of her friends gave up coffee, said the woman, who asked not to be identified. A five-cup-a-day coffee drinker herself, she said she was willing to do the same.

"I'd stop," she said. "There are other hot drinks that are just as satisfying."

Pub Date: 3/13/97

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.