Coffee Prices Perking Up 14 Percent

Tue Dec 14, 2004
By Jeff Coelho

NEW YORK (Reuters) - Coffee lovers are digging deeper into their pockets for their daily fix of the black brew.

Kraft Foods Inc. (KFT.N: Quote, Profile, Research) raised the price of its Maxwell House coffee brand by 14 percent for a 13-ounce can, becoming the second major U.S. roaster to hike prices in a week due to the rising cost of raw beans.

The new list price, retroactive to Dec. 10, will be $2.29 per 13-ounce can, up from $2.01, a company spokeswoman said on Tuesday. Maxwell House is Kraft's leading retail coffee brand.

"The price advance reflects the increase in green prices," said Abbe Serphos, the Kraft spokeswoman.

Kraft, which last raised coffee prices on its Maxwell House brand in November 2002, followed a 14-percent hike in roast and ground coffee prices by roaster Folgers, a brand of Procter and Gamble Co. (PG.N: Quote, Profile, Research) , on Dec. 9.

Sara Lee Corp. (SLE.N: Quote, Profile, Research) may follow suit for its Chock full o'Nuts brand, if past price moves are any indication. A spokesman for the company was not immediately available for comment.

Specialty retail coffee chain Starbucks Corp. (SBUX.O: Quote, Profile, Research) increased beverage prices in North America by 11 cents a cup on average on Oct. 6.

Analysts said rising prices reflect a fresh change for an industry which had suffered a crisis from years of overproduction and low prices, forcing thousands of coffee growers in developing countries out of business.

"This is the first time in two years that we've had a sustainable rally in the futures market that warranted an increase," said Judy Ganes of J. Ganes Consulting, a commodities analyst. "The years of oversupply are behind us. It was long anticipated."

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