With coffee prices continuing to rise, leading coffee manufacturers have announced price hikes for their packaged coffee.
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Traders bought and sold 'future' contracts - an agreement to buy coffee, say, in three months time at a certain price - protecting themselves from the worry that a crop failure might drive up the price of coffee in the intervening months.
In practice, he says, farmers cannot afford to diversify out of coffee when the price falls.
And the owners of the coffee shop set the price high enough that they were willing to part with as much coffee as I chose to drink.
If the price of coffee increased by 50 percent overnight, many people would look for reasonable substitutes, like tea.
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You can imagine what that would do the price of coffee pots.
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Worse, the price of coffee, which is grown in similar places to coca, has slumped because of world overproduction, which may induce farmers to switch to coca.
Price indexes for coffee, milk and white bread have all advanced 6% year-over-year since 2004.
The company forecast that fiscal year profits for 2011 will be offset by 20 cents per share due to the rising price of arabica coffee beans.
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Hence, a small logo on a jar of coffee means politically-minded consumers get to pay more for their daily cup, comfortable in the knowledge that the farmers who grew those coffee beans receive a decent price for their crop.
"Twenty years ago, people thought the price of a Starbucks coffee was ridiculous, " she said.
Tanzania's exports are dominated by products whose price is weak - coffee, tea, cashew nuts and cotton.
This price barrier makes the coffee shop culture mainly a preserve of the upper middle classes in India.
Starbucks targets a more affluent demographic of coffee drinkers that typically exhibit strong brand loyalty, making demand for its coffee more inelastic with respect to price fluctuations.
This then drives down the price of non-Fairtrade coffee even further, making non-Fairtrade farmers poorer.
Smucker, the owner of Dunkin Donuts, Folgers, and Millstone coffee brands, announced a 9 percent price increase in August.
The standard economic argument against Fairtrade goes like this: the low price of commodities such as coffee is due to overproduction, and ought to be a signal to producers to switch to growing other crops.
And I remain impressed that for less than the price of a cup of coffee, I can pop a plain envelope into a box and have confidence, more often than not, that it will be delivered halfway around the world.
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As a result, it is especially rewarding to be part of a foundation that provides fundamental change to less fortunate families sustaining themselves at the price of one cup of coffee per day and to make a difference for these families and their communities.
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Its latest winning strategy is the success of its coffee, which has won approval from Consumer Reports magazine who rated McDonald's coffee higher than Starbucks based upon both taste and price.
This has scared off customers, who have been defecting to fast-food chains such as Dunkin' Donuts or Panera Bread, which sell reasonable coffee for as little as a quarter of the price of a fancy Starbucks brew.
All coffee producers and sellers will be affected by the price increase, but when you are at the top of the price ladder and have painfully slow growth that is already a result of those lower McDonald's prices, that pain may be more immediate and severe.
While other coffee retailers might see rising input costs and their corresponding price increases pressure market share as consumers seek cheaper alternatives, we believe Starbucks remains relatively shielded from this outcome due to the nature of its customer base.
Last week led Deutsche Bank to ease back on its share price target for Starbucks based upon potential loss of coffee sales to McDonald's.
The higher cost means gourmet coffee drinkers aren't seeing the full benefit of a steep price drop in the past year.
"Buying what you're selling during a distribution has a strong tendency to artificially inflate the price, " says Columbia Law School securities expert John Coffee.
In another experiment, this time on his undergraduates, Mr Rao offered two deals on loose coffee beans: 33% extra free or 33% off the price.
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