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Quality coffee demand stable despite soaring prices

Published 11/12/2010, 09:17 AM
Updated 11/12/2010, 09:20 AM

* Specialty coffee shops in U.S. see growth next year

* Prize-winning coffee from auctions finding new markets

By Mica Rosenberg

SAN JOSE, Costa Rica, Nov 12 (Reuters) - Demand for top-quality coffee sold in coffee shops and on grocery shelves could still increase despite record prices that have pushed up the cost per cup, industry sources say.

An internal study last quarter by the Specialty Coffee Association of America surveyed large and small coffeehouse chains and independent coffee shops across the United States and found more optimism about sales.

The survey completed in October showed coffee sellers predicted an 8 to 9 percent jump in sales over the next 12 months, up from an earlier forecast of 5 to 6 percent growth.

Prices for arabica coffee, the bean used in the highest-quality blends, skyrocketed to a 13-1/2-year high this week, trading above $2.20 per lb, a cost that has been at least partly passed on to coffee drinkers worldwide.

But so far high-end coffee customers are not changing their habits, Ric Rhinehart, SCAA executive director, said at the Sintercafe coffee conference in San Jose this week.

"Once you've had good coffee it's hard to go back," Rhinehart told Reuters.

While coffee houses have seen a 2 to 4 percent increase in commodities costs, they have been able only to pass on a 1 to 2 percent increase in menu prices, the SCAA said.

MORE SMALL ROASTERS

In Europe, the story is mixed, with coffee consumption falling in some countries but on the rise in others, said Mick Wheeler from the Specialty Coffee Association of Europe.

"For the consumer, price is always a factor but it is never the dominant factor," he said. People will often go to a coffee shop or a convenience store with the express purpose of buying coffee and are not discouraged by slight price rises.

There has been some backlash against moves by large roasters to use more low-quality, cheaper coffee in blends. More small European roasters are offering an alternative by specializing in premium beans.

"In the last year alone, there have been 15 to 20 new micro-roasters who have joined my organization. In the United Kingdom context that is an explosion," Wheeler said in an interview.

At the top end of the spectrum, award-winning coffee put up for auction by the Cup of Excellence is also finding new buyers, said the program's director, Susie Spindler.

Some of the best coffee sold by individual farmers at auction can fetch record prices of more than $100 per lb. "You've got a lot more competition from different markets now," Spindler said. "There are a lot of new companies coming on board that want those coffees no matter what they cost." (Editing by Dale Hudson)

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