Higher Coffee Prices Could Give Consumers A Jolt
NEW YORK (CBSNewYork) - Some higher coffee prices are brewing because of a South American drought.
As a result, the jolt you get the next time you buy a cup of coffee may not just be from the caffeine.
The price for a cup of coffee could be going up.
As CBS 2's Alexis Christoforous reported, drought conditions in Brazil have hurt the coffee crop and now wholesale coffee prices are on the rise.
Peter Crippen, owner of Manhattan's Rex Coffee Shop, sells about 200 cups of coffee a day and said his profits are about to get squeezed because he's spending more on beans
"Our espresso went up 7 percent in a week," he said.
Wholesale coffee prices have shot up to a two-year high, in part due to a drought in Brazil. That's where a third of the world's coffee is grown.
The drought is 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.
"I think we're likely to see coffee prices move upward anywhere from 20, 25 percent in mainstream grocery channels," Ross Colbert with Rabobank said.
The big coffee chains buy their beans way in advance, so prices at Starbucks and other major retailers are not expected to go up this year,
But some smaller shops have already been forced to raise prices, Christoforous explained.
"In some cases, we've seen coffee shop prices already up 10 percent," Colbert said.
Crippen said for now, he won't pass on the cost to his customers.
"If it went up another 7 percent we would have to jump our price probably about a quarter," said Crippen.
The price hike is affecting coffee made with Brazil's Arabica beans. This is Brazil's first shortage in five years.
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