Local roasters, coffee shops struggle with higher coffee prices

While rising crude oil prices have many Iowans paying more at the pump, there's another energizing black liquid that has been undergoing a worrying rise in price: Coffee.

Coffee futures on the New York Mercantile Exchange have risen from about $1.40 a pound in March 2010 to about $2.70 as of last week, and everyone from major chains to small independent coffee shops are struggling to keep prices stable for their customers.

Many reasons are cited for the sudden growth in prices. Major coffee-producing nations Brazil and Colombia experienced bad crops in recent years, which has a major effect on stores and roasters seeking premium products. There also is increased global demand from countries such as China that previously preferred tea as its caffeinated beverage of choice.

Whatever the reasons, the jump in price spells increased costs to local coffee roaster Lee Ulrich.

“Before, I didn't worry about price when I bought beans. Now I actually email my suppliers and check,” he said.

Ulrich owns L&L Coffee Co., 1124 First St. St. NW, Cedar Rapids, and roasts coffee for several area coffee shops. When the cost for beans first began to rise significantly, he attempted to absorb the increase in hopes that it would shortly go down. After a few months, that didn't happen and he began to increase his prices to match.

Ulrich said the reason behind the price surge that bothers him the most is increased speculation in coffee on commodities markets.

“We're not like gasoline, We can't adjust our prices daily,” Ulrich said.

One of the shops Ulrich supplies, Java Creek Cafe, 588 Boyson Rd. NE, Cedar Rapids, has not increased its prices, but co-owner Tyler Altenhof said he expects he will need to at some point during the next few months.

“We're trying to absorb it for now,” Altenhof said.“We haven't seen quite the increase so far.”

Java Creek is no stranger to dealing with price increases since 80 percent of its business is centered around food service. Altenhof has gotten used to seeing the prices of his ingredients fluctuate over the years, but coffee usually is the most stable item on the menu.

“Coffee's always been the staple in terms of pricing, but I think we can throw that out,” he said.

The Java House, with several locations in Iowa City, has needed to increase its prices in response to growing expenses from its suppliers. The chain used to charge $1.96 for a 16-ounce cup of coffee. With its spring menu, it now charges $2.10 for 16 ounces of its house blend and $2.85 for premium roasts such as its Celebration blend.

The pricing structure is an attempt to recoup some of the increased cost without hurting the average customer, according to Nicole Millard, operations manager at Java House's downtown Iowa City location, 211 1/2 E Washington St.

“It's been a struggle for us to keep it fair. Sometimes the best value means going to better quality coffee,” she said.

While no one knows when the price of coffee will level off, Ulrich, Altenhof and Millard agree that it won't be soon. They see the bean's value continuing to rise through the year before leveling off.

“My gut says you're going to see a new peak in the next few months and then probably back a little bit. But it's not going to go back to what it was a year ago,” Ulrich said.

Millard hopes the market reaches that point sooner rather than later.

“If it doesn't level off, a lot of the current coffee industry just isn't going to be sustainable,” she said.“Only the richest people will be able to afford coffee.”