Coffee addicts, watch out–your addiction isn’t recession-proof. The Financial Times reports that lousy crops and high demand are causing a sharp price increase in the prices of coffee and sugar:
“We are in a dangerous situation,” Andrea Illy, chief executive of Italy’s leading coffee company, told the Financial Times, warning that prices could “explode” due to supply shortages.
Until recently, it was widely assumed that the global economic crisis would damp consumption and prices for coffee. However, that forecast proved wrong, since demand for coffee has remained high, even while consumers have moved from cafés to home drinking.
Kraft, owner of the Maxwell House coffee brands, raised retail prices on its Colombian blend by almost 19 per cent last month due to the rising prices of Colombian coffee beans. Nestlé declined to comment on whether it has been raising prices on Nescafé.
Separately, sugar prices in New York and London rose last week to their highest in almost three years. White sugar prices rose above $450 a tonne, a 52 per cent gain from mid-December, as traders bet that India, the world’s largest consumer, will require hefty imports to compensate for the failure of the local crop.
Time to stock up on the sauce.