Thursday, December 09, 2004


what's in those cans, part iv

"folgers, citing rising green coffee prices, announced thursday it will boost the price of its roast-and-ground coffee by 14 percent. . ."

reuters helpfully informs us this is the first time since 2002 they have increased prices.

but now that we have a better idea of what's in those cans, would you drink that stuff even if they weren't dumping a massive price hike on you? 14%, hmm, i think that's US$0.28 or so a can, roughly US$0.022 an oz., about US$0.35 a pound.

i do find this pricing confusing, because while the news story says the new list price is US$2.28 a can, cans of folgers in new york cost way more. i thought it might just be a city thing, but walgreen's says a 13 oz. can of folgers is US$2.99 -- i think walgreens' a pretty standard store across the whole country -- which means a 14% increase takes that 13 oz. to US$3.40, or US$4.18 a pound, roughly.

scaa chief ted lingle says that thru november, the price rise folgers has endured in actual coffee cost averaged about US$0.09 [red highlight in far right column mine], or 3% of that can. (chart © 2004 coffee publications, inc.) somebody check my math ok?

i guess that extra 11%'s for the company christmas party? or as lingle says: "cost is a fact, price is a policy."

i've talked about the rising coffee prices here already. if i know that price increase is somehow getting back to the farmer, even a few pennies, then i don't mind. but why do i doubt any of p&g's hike is going anywhere but to fund the corporate golf tournament?

(on this note, we can't help but mention that the commercial coffee sector's little 2005 annual clubby get-together will be at fairmount turnberry isle. after the "big four" -- sara lee, nestle, p&g, kraft -- executives vie for spa facials and good tee times, they can ride their little putt-putt carts along the "gracefully sculpted bunkers" discussing more ways to peddle their defect-filled products, thus shafting farmers and consumers alike.

i have a thought: instead of wasting all that cash they've made on the backs of the serfs, excuse me farmers, like russian aristocrats, why don't they hold a smaller party and send the cash difference to fund more health clinics or schools at origin? you'll notice mostly specialty coffee names on that grounds for health supporters page, names you've also seen here on bccy, like gillies, dallis, counterculture, atlantic, interamerican, paragon, coffee holding, green mountain. . .

but i am too hard on those big four executives -- after all "getting pampered is hard work!")

this was the main reason i was rather calm about the mermaid raising her prices earlier this year. she at least buys a fair amount of her coffee through farmer relationships, which means i feel that the farmers have already and will in the future derive some benefit.

but to peddle junk coffee-by-products and then rake in more cash claiming it's all due to recent market increases. . .hooey.

"coffee growing nations lap up only about $5-$6 billion in earnings, while retail sales in the coffee consuming world total some $70-$80 billion," said i.c.o.'s chief nestor osorio yesterday at a speech here in new york at the harvard club.

the big four really do have an enormous fountain of cash. that's the forest level: on the tree level, osorio's famous for saying that of that US$3+ latte you just bought, the farmer received US$0.04 or less.

"while coffee futures for march delivery in new york were quoted more than US$1 a lb on wednesday and on dec. 2, the highest level in more than four years, the recent depreciation of the U.S. currency nullified those gains," as reuters quotes osorio.

in the meantime, what can average coffee lovers do? keep on keepin' on -- just continue to enjoy the premium specialty coffee you buy from your local independent neighborhood roaster/retailer or coffeehouse.

abjure the low-quality "coffee" the big four offers in those supermarket cans and jars! as more consumers make the switch, they'll have to respond with better quality and better treatment of coffee farmers.

posted by fortune | 7:48 AM | top | link to this | email this: | links to this post | | 0 comments

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