Specialty Coffee Shops Hurt By Brazilian Freeze

CAFFEINE February 1995

Last year's deep freeze in Brazil has hiked the price of gourmet coffee, causing shutdowns in the once-booming industry (Warren Getler, "Gourmet-Coffee Trade Still Under the Weather," Wall Street Journal, Jan. 3, 1995, p. 12).

The price of a pound of coffee tripled from 70 cents to $2.40 after two killing frosts and a drought nearly wiped out the 1994 arabica coffee crop. Prices have fallen now to about $1.72 per pound, but are expected to rise once again.

Many smaller shops could not raise prices enough to keep up with what they were paying for coffee. The price increase was good news, however, for the large chains who are using the chance to gobble up competitors. The coffee bean supply is not expected to recover for a number of years and the industry will probably continue to consolidate.