Why are coffee prices on the rise?
Posted: 06.23.2011 at 3:51 PM
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MARQUETTE -- Here's a wake up call:  lately, it's not just the caffeine in coffee giving your senses a boost.  These days, it's also its price.

According to marketwatch.com, major brands, like Dunkin' Donuts and Folgers, have raised their prices four times since May 2010.  And the problem starts at the source--the price of a pound of raw coffee beans has nearly doubled in a year.  So why the climb in coffee costs?  Local roasters at Dead River Coffee in Marquette say it’s simple.

"They're drinking more coffee," said Theo McCracken, owner of Dead River Coffee.

Coffee has long been the energy driving drink in the Americas.  Since the 1970s, Starbucks has brewed a new generation of coffee lovers, with shops on every city street.  And now recently, Asian cultures have traded their tea cups for coffee mugs.

"China and India are wanting more coffee, so they're taking more of the coffee out of the market," said McCracken.

Higher demand for a commodity that has a lower supply.  Two of the biggest growing regions, Columbia and Brazil, have experienced poorer growing seasons in the last few years.  But that's not all there is to blame...so is the stock market.

In a time when investments can be scary, consumers have put their money in tangible commodities like coffee, driving prices up.

"It's perceived by investors and shorter-term types like speculators as perhaps a safer asset that holds its value more effectively," said Marquette investment representative, Paul Hein.

So what does the future hold?  Well, some analysts say that consumer coffee prices peaked in May and are slowly trending lower.  Analysts are calling for prices to drop as speculators sell their shares in the next few months.  But brewers insist, as prices rise and fall, consumers will continue to get their caffeine fix.