Java Prices Jump

By Chris Glorioso
|  Friday, Mar 25, 2011  |  Updated 8:15 AM EDT
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Coffee drinkers may notice the price of coffee is going higher. <a title=Chris Glorioso tells us what's behind the jump." />

Coffee drinkers may notice the price of coffee is going higher. Chris Glorioso tells us what's behind the jump.

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New Yorkers are starting to notice nickel and dime hikes in the cost of coffee after several shops raised prices following a remarkable run-up in the wholesale cost of green beans from Brazil, Colombia and Vietnam.

Last month, owners of the “Joe” coffee chain in Manhattan posted letters to customers explaining how sky-high prices of raw coffee have forced them to increase the price of a small cup of coffee by 20 cents.

“We’re too small to be the bad guys really,” said Amanda Byron, who selects and buys coffee for the “Joe” brand. 

Despite the modest price increases, business at the “Joe” coffeehouse in Union Square was booming on a recent Thursday afternoon.

“Mostly consumers are willing to start paying more money,” Byron said.  “We’ve had almost no complaints whatsoever for the small increases in prices that we’ve had to do.”

Part of the reason small coffee shops have had to consider hiking java prices is that the roasters who prepare the beans are passing on higher costs demanded by farmers. So far this year, a prominent Brooklyn roaster has been hit with a pair of price hikes on high-end Arabica beans.

“It started a while ago with the Colombian coffees,” said Peter Longo, who owns Porto Rico Importers in Williamsburg. 

“They had some bad crops and there was a shortage of coffee and I noticed the coffee went up a dollar a pound very quickly, like overnight.”

Another reason for creeping coffee prices is burgeoning demand in the developing world, especially Asia.

“People are making more money there and they want luxuries and high quality coffee is part of that,” Longo said.

Speculative trades in the commodity markets are exacerbating the coffee price run-up, analysts say. 

In 2010, the value of coffee futures contracts on the Intercontinental Exchange rose 77 percent, reaching a 16-year high.

While price increases at coffee shops have been modest so far, coffee manufacturers have made more pronounced price hikes on the products typically found on grocery shelves.  

In the last year, the makers of Maxwell House have introduced a 22 percent price hike. Makers of Folgers increased prices by 10 percent. Starbucks pre-packaged grounds will cost consumers 12 percent more than a year ago.

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