The laws of supply and demand deem that when a commodity (such as raw coffee beans) is in short supply, its price will rise.
With much smaller than usual harvests in Colombia for two years in a row, the supply of high quality coffees has been in short supply and we have seen big increase in the price of coffee over the past six months. Just about every coffee roaster has raised their wholesale price, some more than once, as they have tried to keep their increases in line with the price of raw coffee.
It may seem curious that roasters don’t necessarily raise their prices at the same time, nor by the same amount. This is largely due to the fact they take different positions in the market, so some may have a strong “long” position and are insulated from current price levels. But no one can be protected forever, so the market realities will eventually force prices up.
How has this affected single-cup coffee prices?
Green Mountain Coffee Roasters — the owner of most K-Cup brands including Green Mountain, Tully’s, Diedrich, Gloria Jean, and Timothy’s — raised K-Cup prices over 10% effective October 15, 2010.
Mars Drinks, Inc — the parent of Flavia — has announced a similar increase but with a twist. Their increase is effective November 8, 2010, but will involve an entire revamping of their product line. Henceforth, all of their coffees will be produced and packed as Alterra coffee, a highly regarded boutique roaster located in Milwaukee, Wisconsin. Those who have had a sneak preview of these coffees (including yours truly) have found them to be excellent products. Each label has a distinct flavor profile, even more so than with the previous Flavia line-up. One thing is for sure — nobody should be complaining that the Flavia machine doesn’t make strong enough coffee.
Lavazza Premium Coffee Co. — Italy’s largest roaster and famous here for their Espresso Point and Espresso Blue single cup cartridges — has announced two increases this year. June’s increase amounted to 5.3%, and the latest price increase, effective October 23rd, is for nearly 8%. With the dollar dropping in value against the Euro, there may be more going on here than just the price of raw coffee! Nevertheless, the highly-regarded Lavazza espresso coffees remain a bargain compared to their competitors Nespresso and Illy.