By Jim Donovan
PHILADELPHIA (CBS) — Get ready to shell out more money for your morning cup of joe. Coffee prices could soon get more expensive. 3 On Your Side Consumer Reporter Jim Donovan tells us why prices are going up and by how much.
Coffee is big business for Peter Crippen. He sells about 200 cups a day at his cafe, but his profits are about to get squeezed because he’s spending more on coffee beans. He says, “Our espresso went up 7 percent in a week.”
Wholesale coffee prices have shot up to a two year high in part due to a drought in brazil, where a third of the world’s coffee is grown. That’s expected to result in a shortage of 11 million bags of coffee beans this season and analysts say it’s only a matter of time before consumers get burned. Prices are expected to go up at grocery stores in the next month.
Ross Colbert is a global strategist in the beverages sector at Rabobank International. He says, “I think we’re likely to see coffee prices move upward anywhere to 20, 25 percent in mainstream grocery channels.” Some smaller shops have already been forced to raise prices. According to Colbert, “In some cases we’ve seen coffee shop prices already up 10 percent.”
Peter Crippen is holding the line at least for now. He says, “If it went up another 7 percent we’d have to jump our price probably about a quarter.”
The big coffee chains buy their beans way in advance, so prices at Starbucks and other big retailers aren’t expected to go up this year.
By the way, brand and type of bean affects pricing too. While the price hikes may affect Brazil’s Arabica, experts say other blends like French roast could be more popular this summer.