Climate Change Brews Coffee Price Spike

Augusto Carneiro hands out a sample of Nossa Familia iced coffee Image: Nossa Familia Augusto Carneiro hands out a sample of Nossa Familia iced coffee

Severe weather disrupts the coffee industry as consumers resume normal coffee buying habits.


 

One of Oregon’s largest coffee companies saw a spectacular jump in stock prices this week after its initial public offering. 

But climate change and a sharp increase in global shipping costs mean coffee companies are facing price increases of another kind — those that increase the cost of your morning cup.

Of course, the price of many commodities has increased in recent months. While the COVID-19 delta variant has slowed the country’s economic recovery, consumer spending continues to increase, according to an August report by Reuters, though inflation levels do appear to be tapering off for now. According to The Consumer Price Index, food prices — including groceries as well as restaurant meals — have increased nearly 1% each month since April. 



Grants Pass-based Dutch Bros Coffee saw a 60% jump in stock prices this week after its initial public offering on Wall Street. The company, which announced its intent to go public this summer, is mostly made up of drive-through coffee stands and offers pre-ordering — giving it an edge over in-person coffee shops as the COVID-19 pandemic continues.

A statement put out by JDE Peet's, the company that owns Peet’s Coffee Intelligentsia Coffee and Stumptown Coffee Roasters, also announced the fluctuations had led to a “sharp rise in ingredient, freight and other costs, which will require us to take appropriate measures." The statement added that "historically, significant fluctuations in green coffee prices have been reflected in the market and we expect that precedent to continue."

Rising national wages from the post-pandemic labor shortage have also factored in the added cost of your espresso. But another, perhaps more persistent factor is at play: climate change. 



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In July of this year, a drought and an unprecedented flash freeze devastated Brazil's coffee and sugar fields.

“There were two glorious weeks there where things looked like they would get back to normal,” says Augusto Carneiro, founder of Nossa Familia Coffee in Portland. 

Then the delta variant hit and  irregular weather upended the market. 



Nossa Familia has felt the sting a bit less than other roasters. Carneiro’s family coffee farm in Brazil was able to work with him on pricing, so the price increases won’t be immediate. 

Sales from Nossa Familia’s online store have been robust, though they slowed down slightly in August. One of the silver linings to the situation is the company setting up an online coffee subscription service, where consumers can pay for weekly, bi-weekly or monthly coffee delivery. 

Business has also been picking up, and Carneiro has been on a hiring spree. He notes that he is now paying higher wages than he used to due to increased demand. 



But although he has connections in Brazil, he expects prices to increase due to other factors, namely the cost of shipping: normally he would be paying $4,500 on average per coffee shipping container. His most recent quote for a shipping container was $15,000. 

“Brazil is the dominant country for growing coffee. What happens there affects the entire world. The commodity coffee price has gone up substantially from where it was,” says Carneiro. “We don’t buy commodity coffee, our coffee quality is way above that, but when the price of commodity coffee goes up, everything goes up. That’s going to squeeze our margins.”


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