Coffee 'risk' for Sumatra reserve
Indonesian coffee growers are illegally clearing an important nature reserve, according to conservation group WWF.
The Bukit Barisan Selatan reserve, on the southern tip of Sumatra, has already lost nearly 20% of its area to illegal coffee growing, the group says.
The park is one of the few areas where endangered Sumatran tigers, elephants and rhinos still co-exist.
Indonesia is the world's fourth largest coffee exporter. The robusta bean it grows is often used in instant coffee.
"About 17% of the national park area is being cultivated for coffee," Nazir Foead, from WWF Indonesia, told reporters.
"If this trend of clearing park land for coffee isn't halted, the rhinos and tigers will be locally extinct in less than a decade," he said.
“ We are asking national and multinational coffee companies to help build sustainable coffee production ”
Nazir Foead ,WWF Indonesia
The WWF said that the illegally grown coffee was blended with legally produced beans before being sold on to international food and drinks companies.
"WWF determined that most of the companies buying the coffee likely were unaware of its illegal origins," the group said in a statement, adding that it had informed some of the companies involved about the situation.
Mr Foead said the group was also working with farmers to convince them to cultivate coffee outside conservation areas.
"WWF doesn't want to shut down the coffee industry," Mr Foead said.
"We are asking national and multinational coffee companies to help build sustainable coffee production around the National Park, while implementing rigorous chain-of-custody controls that exclude all illegally grown coffee from their supplies."
The report said several well-known brands were involved.
One company, Nestle, issued a statement saying it regretted such unacceptable activities and never willingly purchased coffee from dubious sources.
But the company said it was often difficult to determine the precise origin of its coffee.
The head of the park told the BBC that some 60,000 hectares - around a fifth of the park's total area - had been taken over by illegal plantations, most of them producing coffee.
The park, which covers 300,000 hectares, is policed by only sixty rangers, he said, and around fifty community workers.
Stopping the expansion of the plantations is all but impossible, he said.
The area is home to some sixty tigers and around the same number of rhinos.
Both species are endangered and park officials say destruction of their natural habitat by farmers is making them easier targets for hunters.
Story from BBC NEWS: http://news.bbc.co.uk/go/pr/fr/-/2/hi/asia-pacific/6269637.stm
Published: 2007/01/17 09:48:27 GMT
© BBC 2011
UPDATE 2-Indonesia Feb coffee exports jump, stockpile drawn down2011-03-02 10:11:48 GMT (Reuters)
UPDATE 2-Indonesia Feb coffee exports jump, stockpile drawn down2011-03-02 10:11:48 GMT (Reuters)
* Exports nearly triple in Feb, exporters fullfil contracts
* Weather affects quality, harvest uncertain
* Early flowering prompted exporters not to sell forward shipment (Adds details, prices, background)
BANDAR LAMPUNG/JAKARTA, March 2 (Reuters) - Indonesia's robusta coffee shipments from the main growing areas in Sumatra island nearly tripled last month versus a year ago as exporters turned to inventories to fulfill old contracts, but concerns over harvests persisted.
Exporters shipped 17,504.98 tonnes in February, compared to 6,606.78 tonnes in the same month a year ago, trade data showed, with rising prices in London futures also prompting more sales from the world's second-largest robusta producer after Vietnam.
"Rallying coffee prices have prompted suppliers to sell their coffee stocks," said Azis Chan Satib, a spokesman at the Indonesia Coffee Association (AEKI).
Harvests in Sumatra usually start in March or April, but farmers have been picking cherries since January as the flowering season began earlier in some areas after the previous crop ended last August.
As a result, many exporters refused to sell forward shipment, preferring to sign nearby contracts to prevent defaults. Exporters in the main growing province of Lampung began to stock pile good-quality coffee last year, with beans estimated at more than 100,000 tonnes in late 2010.
AEKI expects Indonesian coffee bean production to fall by 30 percent this year from an estimated 600,000 tonnes in 2010, as rains in key producing areas damage cherries.
Unseasonal heavy rains cut output of many commodities in Indonesia last year or in early 2011, leaving coffee growers unable to take advantage of a rally in coffee prices that took London second-month robusta coffee futures up 57 percent in 2010 to end the year at $2,097 per tonne.
EXTENDED RAINS
The prolonged rains resulted in Indonesian exports falling 28 percent last year. The country's exports last year fell to 247,750.34 tonnes, from 342,844.25 tonnes in 2009.
Robusta, used in instant coffee, mostly grows in Lampung, Bengkulu, and South Sumatra provinces at the southern end of Sumatra island and accounts for about 85 percent of Indonesia's coffee production. The rest is higher value, aromatic arabica coffee.
Robusta has tracked rallies in premium arabica beans to levels not seen in more than 30 years to stand at around 278 U.S. cents a pound.
The jump in February exports surprised some dealers, although it also meant that inventories were being drawn down as the current harvest yielded many black, and mouldy beans.
London's May robusta contract fell $24 to $2,360 a tonne in early trade on Wednesday.
"It is quite a surprise for me, because we tend to think the coffee harvesting progress is not going well due to the rainy season," said Ker Chung Yang, investment analyst at Phillip Futures in Singapore.
"This is likely to weigh on the coffee prices, especially robusta coffee, because this is a huge number. They (Indonesia) are likely to export more at the moment because they want to enjoy the higher coffee prices."
Indonesia competes with Vietnam, where stocks are falling given a faster shipping pace so far in the October 2010/September 2011 harvesting season while the volume of exportable beans may have fallen due to a higher ratio of small-sized beans, traders said.
Robusta prices in Vietnam's domestic market jumped to a record high in local currency terms on Tuesday to 46 million dong ($2,205) a tonne, but exporters still found it difficult to secure beans from growers who are holding back sales, traders said.
Following are details of exports:
MONTH 2011 2010 Pct change
(tonnes) (tonnes) (y/y) January 17,589.10 6,740.40 +161 February 17,504.98 6,606.78 +165
Total 35,094.08 247,750.34 n/a (Reporting by Mas Alina Arifina; Writing by Michael Taylor and Lewa Pardomuan; Editing by Ramthan Hussain)
* Exports nearly triple in Feb, exporters fullfil contracts
* Weather affects quality, harvest uncertain
* Early flowering prompted exporters not to sell forward shipment (Adds details, prices, background)
BANDAR LAMPUNG/JAKARTA, March 2 (Reuters) - Indonesia's robusta coffee shipments from the main growing areas in Sumatra island nearly tripled last month versus a year ago as exporters turned to inventories to fulfill old contracts, but concerns over harvests persisted.
Exporters shipped 17,504.98 tonnes in February, compared to 6,606.78 tonnes in the same month a year ago, trade data showed, with rising prices in London futures also prompting more sales from the world's second-largest robusta producer after Vietnam.
"Rallying coffee prices have prompted suppliers to sell their coffee stocks," said Azis Chan Satib, a spokesman at the Indonesia Coffee Association (AEKI).
Harvests in Sumatra usually start in March or April, but farmers have been picking cherries since January as the flowering season began earlier in some areas after the previous crop ended last August.
As a result, many exporters refused to sell forward shipment, preferring to sign nearby contracts to prevent defaults. Exporters in the main growing province of Lampung began to stock pile good-quality coffee last year, with beans estimated at more than 100,000 tonnes in late 2010.
AEKI expects Indonesian coffee bean production to fall by 30 percent this year from an estimated 600,000 tonnes in 2010, as rains in key producing areas damage cherries.
Unseasonal heavy rains cut output of many commodities in Indonesia last year or in early 2011, leaving coffee growers unable to take advantage of a rally in coffee prices that took London second-month robusta coffee futures up 57 percent in 2010 to end the year at $2,097 per tonne.
EXTENDED RAINS
The prolonged rains resulted in Indonesian exports falling 28 percent last year. The country's exports last year fell to 247,750.34 tonnes, from 342,844.25 tonnes in 2009.
Robusta, used in instant coffee, mostly grows in Lampung, Bengkulu, and South Sumatra provinces at the southern end of Sumatra island and accounts for about 85 percent of Indonesia's coffee production. The rest is higher value, aromatic arabica coffee.
Robusta has tracked rallies in premium arabica beans to levels not seen in more than 30 years to stand at around 278 U.S. cents a pound.
The jump in February exports surprised some dealers, although it also meant that inventories were being drawn down as the current harvest yielded many black, and mouldy beans.
London's May robusta contract fell $24 to $2,360 a tonne in early trade on Wednesday.
"It is quite a surprise for me, because we tend to think the coffee harvesting progress is not going well due to the rainy season," said Ker Chung Yang, investment analyst at Phillip Futures in Singapore.
"This is likely to weigh on the coffee prices, especially robusta coffee, because this is a huge number. They (Indonesia) are likely to export more at the moment because they want to enjoy the higher coffee prices."
Indonesia competes with Vietnam, where stocks are falling given a faster shipping pace so far in the October 2010/September 2011 harvesting season while the volume of exportable beans may have fallen due to a higher ratio of small-sized beans, traders said.
Robusta prices in Vietnam's domestic market jumped to a record high in local currency terms on Tuesday to 46 million dong ($2,205) a tonne, but exporters still found it difficult to secure beans from growers who are holding back sales, traders said.
Following are details of exports:
MONTH 2011 2010 Pct change
(tonnes) (tonnes) (y/y) January 17,589.10 6,740.40 +161 February 17,504.98 6,606.78 +165
Total 35,094.08 247,750.34 n/a (Reporting by Mas Alina Arifina; Writing by Michael Taylor and Lewa Pardomuan; Editing by Ramthan Hussain)
ANALYSIS-Indonesia supply woes to add froth to coffee market
ANALYSIS-Indonesia supply woes to add froth to coffee market
Wednesday March 02, 2011 01:06:02 AM GMT
COFFEE /INDONESIA (ANALYSIS, PICTURE)
* Indonesians reluctant to sell, beans quality bad
* Vietnam emerges as key seller
* Sumatra beans at $80 discount; Vietnam $140
By Lewa Pardomuan
SINGAPORE, March 1 (Reuters) - A bad coffee harvest in Indonesia could compound worries about a scarcity of good quality beans, allowing the world's second-largest robusta producer to give a filip to global prices even as rival Vietnam steps up exports.
More robustas from top producer Vietnam could potentially weigh on prices, but lagging sales from Indonesia will send buyers scrambling for beans -- replicating a supply concern in the arabica market after heavy rains slashed output in South America.
With physical tightness expected to influence sentiment in 2011 and speculators unwilling to turn short, robusta is likely to ride on fundamentals to reach new highs beyond a near three-year peak around $2,400 a tonne.
Robusta, a bitter-tasting variety used in instant coffee, has tracked rallies in premium arabica beans to levels not seen in more than 30 years to stand at around 278 U.S. cents a pound.
Helping underpin prices will be an increase in global consumption.
This will put a floor under prices, even though Vietnam's harvest will again be good.
"We have seen investors shifting their focus from grains to soft commodities. It's due to quality concerns. Investors may think the grains and oilseeds markets are overdone now," said Ker Chung Yang, investment analyst at Phillip Futures in Singapore. "By the end of the year, robusta may top $2,800 (a tonne)."
Excessive rains have troubled Indonesia's output in 2010 and early in 2011. This has triggered a shift in the harvesting season and raised fears there will not be many beans left in the middle of this year when the harvest normally starts.
While Vietnam has emerged as a key seller following a bumper crop and high prices in London, exporters in Indonesia are struggling to find quality beans after an early harvest yielded a largely black, rotten and mouldy crop.
Indonesian robusta is more expensive than Vietnamese beans because of its bold flavour. Despite favourable international prices, many exporters are reluctant to sell forward, preferring to honour old contracts and prevent defaults.
Indonesian robusta fetches a discount of $80 a tonne to London's May contract -- much smaller than the $140 discount for beans from Vietnam.
SHORT SUPPLY
"Unfavourable weather conditions in major coffee-producing regions continue to increase uncertainties regarding supplies of some origins," the International Coffee Organization said in its latest report.
"Currently there are possibilities for replacing those origins in short supply. However, this is likely to become more difficult."
Robusta accounts for about 85 percent of Indonesia's output, while the rest is higher value, aromatic arabica.
Combining robusta and arabica, Indonesia is the world's third-largest producer after Brazil and Vietnam, accounting for around 7 percent of global output. It mainly exports beans to roasters in Europe.
"At the same period last year, you could buy beans at $100 to $120 discount, but differentials have not widened now, even though more beans are coming in," said a dealer in Bandar Lampung, the provincial capital of Lampung on the main growing island of Sumatra.
"Exporters only want to sell nearby. Also, many local roasters are devouring domestic beans because they are expanding capacity. People have been expecting the differential to widen because of pressure from futures, but it doesn't happen."
Harvests in Sumatra usually start in March or April, but farmers have been picking cherries since January as the flowering season began earlier in some areas after the previous crop ended in August last year.
The ICO puts Indonesia's output at 9.5 million 60-kg bags in the crop year to September 2011, down 16.5 percent from a year ago, while Vietnam's output has risen 1.3 percent from the previous crop to 18.43 million bags.
Wild weather could cut Indonesia's coffee exports by 15 percent to 7.4 million bags in the 2010/11 marketing year, according to the USDA, or around 7 percent of global exports.
Vietnam's coffee exports between October 2010 and February, the first five months of the 2010/2011 season, were estimated to reach 8.75 million bags, up 5 percent from 8.33 million 60-kg bags shipped a year ago, the government said.
KEEN SELLERS
"Even if more than half of the Vietnamese 2010/2011 crop has already been sold up to now, farmers remain keen sellers," said a dealer in Hong Kong, who trades Vietnamese robusta.
"At a price of $2,380 in London, for sure you are a seller. It's historically one of the best prices farmers can get. It would be a mistake to stop selling."
Some farmers in Vietnam are still holding on to stocks, hoping for domestic prices to surpass an all-time high above $2,190 a tonne, but they could be tempted to sell the rest at high prices to roasters unable to secure supply from Indonesia.
"I guess roasters have to source from Vietnam, and even local Indonesia roasters often import from Vietnam whenever the domestic price is high," said a dealer in Singapore who trades robustas.
"Roasters have preferences when it comes to taste, but for the market here, we prefer Indonesian robusta because it has a stronger taste, while Vietnamese beans are more neutral."
For the Indonesians, steady demand from local roasters will ensure domestic prices stay at their highest since mid-2008 at around $2,200 a tonne. The USDA expects domestic consumption to rise nearly 3 percent to 1.9 million bags in the 2010/11 year.
"These days, there's no need for coffee traders to worry," said Rachim Kartabrata, executive director of the Indonesian Coffee Exporters Association. "If there are no foreign buyers, domestic roasters will definitely buy."
The association, which uses calendar year, expects Indonesian coffee bean production in 2011 to fall by 30 percent from an estimated 600,000 tonnes in 2010, as rains in key producing areas damage cherries.
(Additional reporting by Fitri Wulandari in JAKARTA; Editing by David Fogarty)
(c) Copyright Thomson Reuters 2011. Click For Restrictions. http://about.reuters.com/fulllegal.asp
Wednesday March 02, 2011 01:06:02 AM GMT
COFFEE /INDONESIA (ANALYSIS, PICTURE)
* Indonesians reluctant to sell, beans quality bad
* Vietnam emerges as key seller
* Sumatra beans at $80 discount; Vietnam $140
By Lewa Pardomuan
SINGAPORE, March 1 (Reuters) - A bad coffee harvest in Indonesia could compound worries about a scarcity of good quality beans, allowing the world's second-largest robusta producer to give a filip to global prices even as rival Vietnam steps up exports.
More robustas from top producer Vietnam could potentially weigh on prices, but lagging sales from Indonesia will send buyers scrambling for beans -- replicating a supply concern in the arabica market after heavy rains slashed output in South America.
With physical tightness expected to influence sentiment in 2011 and speculators unwilling to turn short, robusta is likely to ride on fundamentals to reach new highs beyond a near three-year peak around $2,400 a tonne.
Robusta, a bitter-tasting variety used in instant coffee, has tracked rallies in premium arabica beans to levels not seen in more than 30 years to stand at around 278 U.S. cents a pound.
Helping underpin prices will be an increase in global consumption.
This will put a floor under prices, even though Vietnam's harvest will again be good.
"We have seen investors shifting their focus from grains to soft commodities. It's due to quality concerns. Investors may think the grains and oilseeds markets are overdone now," said Ker Chung Yang, investment analyst at Phillip Futures in Singapore. "By the end of the year, robusta may top $2,800 (a tonne)."
Excessive rains have troubled Indonesia's output in 2010 and early in 2011. This has triggered a shift in the harvesting season and raised fears there will not be many beans left in the middle of this year when the harvest normally starts.
While Vietnam has emerged as a key seller following a bumper crop and high prices in London, exporters in Indonesia are struggling to find quality beans after an early harvest yielded a largely black, rotten and mouldy crop.
Indonesian robusta is more expensive than Vietnamese beans because of its bold flavour. Despite favourable international prices, many exporters are reluctant to sell forward, preferring to honour old contracts and prevent defaults.
Indonesian robusta fetches a discount of $80 a tonne to London's May contract -- much smaller than the $140 discount for beans from Vietnam.
SHORT SUPPLY
"Unfavourable weather conditions in major coffee-producing regions continue to increase uncertainties regarding supplies of some origins," the International Coffee Organization said in its latest report.
"Currently there are possibilities for replacing those origins in short supply. However, this is likely to become more difficult."
Robusta accounts for about 85 percent of Indonesia's output, while the rest is higher value, aromatic arabica.
Combining robusta and arabica, Indonesia is the world's third-largest producer after Brazil and Vietnam, accounting for around 7 percent of global output. It mainly exports beans to roasters in Europe.
"At the same period last year, you could buy beans at $100 to $120 discount, but differentials have not widened now, even though more beans are coming in," said a dealer in Bandar Lampung, the provincial capital of Lampung on the main growing island of Sumatra.
"Exporters only want to sell nearby. Also, many local roasters are devouring domestic beans because they are expanding capacity. People have been expecting the differential to widen because of pressure from futures, but it doesn't happen."
Harvests in Sumatra usually start in March or April, but farmers have been picking cherries since January as the flowering season began earlier in some areas after the previous crop ended in August last year.
The ICO puts Indonesia's output at 9.5 million 60-kg bags in the crop year to September 2011, down 16.5 percent from a year ago, while Vietnam's output has risen 1.3 percent from the previous crop to 18.43 million bags.
Wild weather could cut Indonesia's coffee exports by 15 percent to 7.4 million bags in the 2010/11 marketing year, according to the USDA, or around 7 percent of global exports.
Vietnam's coffee exports between October 2010 and February, the first five months of the 2010/2011 season, were estimated to reach 8.75 million bags, up 5 percent from 8.33 million 60-kg bags shipped a year ago, the government said.
KEEN SELLERS
"Even if more than half of the Vietnamese 2010/2011 crop has already been sold up to now, farmers remain keen sellers," said a dealer in Hong Kong, who trades Vietnamese robusta.
"At a price of $2,380 in London, for sure you are a seller. It's historically one of the best prices farmers can get. It would be a mistake to stop selling."
Some farmers in Vietnam are still holding on to stocks, hoping for domestic prices to surpass an all-time high above $2,190 a tonne, but they could be tempted to sell the rest at high prices to roasters unable to secure supply from Indonesia.
"I guess roasters have to source from Vietnam, and even local Indonesia roasters often import from Vietnam whenever the domestic price is high," said a dealer in Singapore who trades robustas.
"Roasters have preferences when it comes to taste, but for the market here, we prefer Indonesian robusta because it has a stronger taste, while Vietnamese beans are more neutral."
For the Indonesians, steady demand from local roasters will ensure domestic prices stay at their highest since mid-2008 at around $2,200 a tonne. The USDA expects domestic consumption to rise nearly 3 percent to 1.9 million bags in the 2010/11 year.
"These days, there's no need for coffee traders to worry," said Rachim Kartabrata, executive director of the Indonesian Coffee Exporters Association. "If there are no foreign buyers, domestic roasters will definitely buy."
The association, which uses calendar year, expects Indonesian coffee bean production in 2011 to fall by 30 percent from an estimated 600,000 tonnes in 2010, as rains in key producing areas damage cherries.
(Additional reporting by Fitri Wulandari in JAKARTA; Editing by David Fogarty)
(c) Copyright Thomson Reuters 2011. Click For Restrictions. http://about.reuters.com/fulllegal.asp
Coffee retailers set to raise prices by 10-12%
Coffee retailers set to raise prices by 10-12%
Raghuvir Badrinath & Debasis Mohapatra / Bangalore March 12, 2011, 0:21 IST
With the costs of coffee beans, sugar, milk and rentals shooting up, coffee retailers in India are looking at a 10-12 per cent rise in prices in the next few weeks.
While Arabica prices in ICE Futures are now ruling at 14 years high of $2.72 per pound for March delivery, Robusta is at $2,290 per tonne for the same month in Liffe futures. Arabica prices are higher due to supply concerns in Brazil and Columbia, two significant contributor of the coffee variety. This variety is expected to reach $2.90 per pound in the near term.
As far as Robusta is concerned, prices are expected to touch $2,400 per tonne of coffee.
Café Coffee Day is looking at the price trend of coffee as well as other commodities and is expected to take a decision on increasing price soon. “While coffee beans are from our captive plantations, it really does not affect us to a large extent. But the rentals and prices of sugar and milk have shot up and we may have to take a decision on increasing prices,” noted a senior official of Café Coffee Day. The coffee chain shop last effected a six per cent price rise last April.
Costa Coffee, too, may be looking at increasing prices. Costa Coffee India CEO, Santosh Unni, said they usually review prices twice a year and had last effected an eight per cent increase in November. “Inflation is extraordinarily high and we will have to see how to manage costs. While we may have to take a price rise, we cannot pass on totally to the consumer as we are still growing this segment,” Unni noted.
India has around 1,500 cafes and this is expected to cross the 2,000 number mark this year. “There should be a smart mix of price rise and not at the cost of losing consumers,” he said.
Harish Bijoor, a noted consultant on the coffee industry said the industry does not have any choices but to go in for the rise. “Garnish this price increase in the coffee commodity with that of what has happened to milk and sugar, and literally everything else that goes into a cup of coffee, and there is a potential threat of high end coffee prices for all. Many players have actually announced successive sets of price increase in roast and ground coffee prices in installments of Rs 5-10 each item, to soften the hit. A few have focused on back end cost cuts...therefore, the price increase, more often than not, will be passed on to the consumer,” Bijoor noted.
Ramesh Rajah, president of Coffee Exporters Association, said cafes should not resort to a price rise on the sole reason of a jump in coffee prices. “On an average, around 8 gm of coffee powder goes into a cup of coffee and many of the cafes blend chicory as well. In this scenario, giving the reason of escalation in coffee prices does not hold good,” he said.
Raghuvir Badrinath & Debasis Mohapatra / Bangalore March 12, 2011, 0:21 IST
With the costs of coffee beans, sugar, milk and rentals shooting up, coffee retailers in India are looking at a 10-12 per cent rise in prices in the next few weeks.
While Arabica prices in ICE Futures are now ruling at 14 years high of $2.72 per pound for March delivery, Robusta is at $2,290 per tonne for the same month in Liffe futures. Arabica prices are higher due to supply concerns in Brazil and Columbia, two significant contributor of the coffee variety. This variety is expected to reach $2.90 per pound in the near term.
As far as Robusta is concerned, prices are expected to touch $2,400 per tonne of coffee.
Café Coffee Day is looking at the price trend of coffee as well as other commodities and is expected to take a decision on increasing price soon. “While coffee beans are from our captive plantations, it really does not affect us to a large extent. But the rentals and prices of sugar and milk have shot up and we may have to take a decision on increasing prices,” noted a senior official of Café Coffee Day. The coffee chain shop last effected a six per cent price rise last April.
Costa Coffee, too, may be looking at increasing prices. Costa Coffee India CEO, Santosh Unni, said they usually review prices twice a year and had last effected an eight per cent increase in November. “Inflation is extraordinarily high and we will have to see how to manage costs. While we may have to take a price rise, we cannot pass on totally to the consumer as we are still growing this segment,” Unni noted.
India has around 1,500 cafes and this is expected to cross the 2,000 number mark this year. “There should be a smart mix of price rise and not at the cost of losing consumers,” he said.
Harish Bijoor, a noted consultant on the coffee industry said the industry does not have any choices but to go in for the rise. “Garnish this price increase in the coffee commodity with that of what has happened to milk and sugar, and literally everything else that goes into a cup of coffee, and there is a potential threat of high end coffee prices for all. Many players have actually announced successive sets of price increase in roast and ground coffee prices in installments of Rs 5-10 each item, to soften the hit. A few have focused on back end cost cuts...therefore, the price increase, more often than not, will be passed on to the consumer,” Bijoor noted.
Ramesh Rajah, president of Coffee Exporters Association, said cafes should not resort to a price rise on the sole reason of a jump in coffee prices. “On an average, around 8 gm of coffee powder goes into a cup of coffee and many of the cafes blend chicory as well. In this scenario, giving the reason of escalation in coffee prices does not hold good,” he said.
Coffee beans price hits 34-year high commodity shoots up by 20% within weeks and experts warn cost has yet to peak
Coffee beans price hits 34-year high
commodity shoots up by 20% within weeks and experts warn cost has yet to peak
By Ryan Crighton
Published: 12/03/2011
DEARER: Ian Cukrowski says coffee prices are rising. Kami Thomson
Record fuel prices have dominated the headlines for months, but soaring prices of another kind could be about to hit consumers in the pocket.
The cost of raw coffee beans on the commodities market has reached a 34-year high after rising by 20% in a matter of weeks, with experts warning that they have yet to peak.
The International Coffee Organisation says a combination of rising world demand and poor harvests in Colombia, Brazil and Latin America has caused a shortage of high-end Arabica coffee beans.
This time last year, 1lb of beans cost around 76p on average – but last week that price hit £1.39.
Ian Cukrowski, who owns the independent MacBeans coffee store on Aberdeen’s Little Belmont Street, said customers can expect to see the cost of coffee rise in the coming months.
“The prices just keep going up and up and up,” he said.
“The main reason is the markets – all the speculators and money men are putting their cash into soft commodities. More people are buying the drink in producing countries as well, which has resulted in there being less to export. Shipping costs have also gone up because of fuel prices and weather has hit production in some areas.
“We put our prices up 10% last month – but costs have risen another 10% since then. We have coffee to see us through the next couple of months, but down the line I do not what will happen.”
Mr Cukrowski said another problem companies are encountering is that because coffee is bought a year in advance, farmers in producing countries are ripping up contracts because they are unhappy at the price they agreed last year.
He added: “Nobody knows when this is going to peak. The last time the prices reached this level was in 1977 when there was a massive frost in Brazil, which wiped out something like half the coffee that year.”
High Street coffee chain Starbucks put prices up in September last year, when chief executive Howard Schultz said it could no longer absorb the increased costs.
“We have thus far chosen to absorb the price increases ourselves and not pass them on to our customers,” Mr Schultz said, “but the extreme nature of the cost increases has made it untenable for us to continue to do so.”
commodity shoots up by 20% within weeks and experts warn cost has yet to peak
By Ryan Crighton
Published: 12/03/2011
DEARER: Ian Cukrowski says coffee prices are rising. Kami Thomson
Record fuel prices have dominated the headlines for months, but soaring prices of another kind could be about to hit consumers in the pocket.
The cost of raw coffee beans on the commodities market has reached a 34-year high after rising by 20% in a matter of weeks, with experts warning that they have yet to peak.
The International Coffee Organisation says a combination of rising world demand and poor harvests in Colombia, Brazil and Latin America has caused a shortage of high-end Arabica coffee beans.
This time last year, 1lb of beans cost around 76p on average – but last week that price hit £1.39.
Ian Cukrowski, who owns the independent MacBeans coffee store on Aberdeen’s Little Belmont Street, said customers can expect to see the cost of coffee rise in the coming months.
“The prices just keep going up and up and up,” he said.
“The main reason is the markets – all the speculators and money men are putting their cash into soft commodities. More people are buying the drink in producing countries as well, which has resulted in there being less to export. Shipping costs have also gone up because of fuel prices and weather has hit production in some areas.
“We put our prices up 10% last month – but costs have risen another 10% since then. We have coffee to see us through the next couple of months, but down the line I do not what will happen.”
Mr Cukrowski said another problem companies are encountering is that because coffee is bought a year in advance, farmers in producing countries are ripping up contracts because they are unhappy at the price they agreed last year.
He added: “Nobody knows when this is going to peak. The last time the prices reached this level was in 1977 when there was a massive frost in Brazil, which wiped out something like half the coffee that year.”
High Street coffee chain Starbucks put prices up in September last year, when chief executive Howard Schultz said it could no longer absorb the increased costs.
“We have thus far chosen to absorb the price increases ourselves and not pass them on to our customers,” Mr Schultz said, “but the extreme nature of the cost increases has made it untenable for us to continue to do so.”
Rising Coffee Prices - Heavy Rains Linked to Global Warming
Rising Coffee Prices - Heavy Rains Linked to Global Warming
Mar 12, 2011 Giovanna De Gennaro
Rising temperatures and heavy rains linked to global warming in Latin America coffee regions are likely responsible for a pricier cup-of-Joe.
According to an article that appeared in The New York Times in March 9, 2011, rising temperatures and intense, unpredictable rains linked to global warming in many of Latin America’s premier coffee regions are likely responsible for rising coffee prices worldwide. Rain in the Columbia coffee region was more than 25 percent above average in the last few years, according to the International Coffee Organization (ICO). Maxwell and Folgers have already increased retail prices by at least 25 percent.
Heavy rains harm crops and the increased humidity favors the proliferation of pests and parasites such as coffee rust. It is no secret that coffee is an addictive habit and it doesn’t help at all that the demand for coffee is increasing along with the demographics of emerging economies such as India and China. Domestic consumption also continues to develop in Brazil, the world's second largest coffee-consuming country after the USA.
Brazil and Columbia PremierCoffee Growing Regions
The world's coffee supply comes primarily from Latin America, Southeast Asia and Africa. The main coffee bean producing regions and exporters in Latin America are Brazil and Columbia. The livelihood of many families is dependent on coffee.beans. According to the Federacion Nacional de Cafeteros de Colombia, in Colombia alone there are 500,000 coffee growing families. These areas produce some of the best Arabica coffee beans used by brands such as Green Mountain and Nespresso.
Grim Weather Outlook
According to coffee expert Peter Baker of CABI, a UK-based non-profit science-based development and information organization that aims to help solve problems in agriculture and the environment, coffee is the world’s most valuable tropical agricultural export produced by about 20 million smallholder families and the weather outlook for the next millennium does not look good. Although the effects of climate change are slow, the negative change is already affecting coffee production
International Coffee Organization (ICO) Reports
Reports from the ICO show that coffee prices in February 2011 increased in relation to their levels in January 2011 with the monthly average of the ICO composite indicator price up from 197.35 US cents per lb to 216.03 US cents per lb, the highest level recorded since June 1977.
Columbia has had three bad harvests and production decreases may continue in the future because the difference between the high and low years of the Arabica cycle has fallen in recent years
There is limited availability of Arabica coffee on the international market. World stocks are at their lowest levels experiencing a fall of more than 33% compared to levels recorded in 2009. They need to be replenished but current prices do not encourage producing countries to retain stocks. Adverse weather continues to affect coffee growing areas in many parts of the world.
Coffee Futures
On the trading floor coffee futures have jumped to more than 40 percent in the last year, according to a CNBC stock market article, and it is expected that your cup-of-Joe will be pricier due to a smaller than normal crop in 2011. The highest quality beans are in "very tight" supply. To make matters worse, increases in prices of oil products only accentuate increased production costs for agricultural products such as coffee.
Copyright Giovanna De Gennaro. Contact the author to obtain permission for republication.
Mar 12, 2011 Giovanna De Gennaro
Rising temperatures and heavy rains linked to global warming in Latin America coffee regions are likely responsible for a pricier cup-of-Joe.
According to an article that appeared in The New York Times in March 9, 2011, rising temperatures and intense, unpredictable rains linked to global warming in many of Latin America’s premier coffee regions are likely responsible for rising coffee prices worldwide. Rain in the Columbia coffee region was more than 25 percent above average in the last few years, according to the International Coffee Organization (ICO). Maxwell and Folgers have already increased retail prices by at least 25 percent.
Heavy rains harm crops and the increased humidity favors the proliferation of pests and parasites such as coffee rust. It is no secret that coffee is an addictive habit and it doesn’t help at all that the demand for coffee is increasing along with the demographics of emerging economies such as India and China. Domestic consumption also continues to develop in Brazil, the world's second largest coffee-consuming country after the USA.
Brazil and Columbia PremierCoffee Growing Regions
The world's coffee supply comes primarily from Latin America, Southeast Asia and Africa. The main coffee bean producing regions and exporters in Latin America are Brazil and Columbia. The livelihood of many families is dependent on coffee.beans. According to the Federacion Nacional de Cafeteros de Colombia, in Colombia alone there are 500,000 coffee growing families. These areas produce some of the best Arabica coffee beans used by brands such as Green Mountain and Nespresso.
Grim Weather Outlook
According to coffee expert Peter Baker of CABI, a UK-based non-profit science-based development and information organization that aims to help solve problems in agriculture and the environment, coffee is the world’s most valuable tropical agricultural export produced by about 20 million smallholder families and the weather outlook for the next millennium does not look good. Although the effects of climate change are slow, the negative change is already affecting coffee production
International Coffee Organization (ICO) Reports
Reports from the ICO show that coffee prices in February 2011 increased in relation to their levels in January 2011 with the monthly average of the ICO composite indicator price up from 197.35 US cents per lb to 216.03 US cents per lb, the highest level recorded since June 1977.
Columbia has had three bad harvests and production decreases may continue in the future because the difference between the high and low years of the Arabica cycle has fallen in recent years
There is limited availability of Arabica coffee on the international market. World stocks are at their lowest levels experiencing a fall of more than 33% compared to levels recorded in 2009. They need to be replenished but current prices do not encourage producing countries to retain stocks. Adverse weather continues to affect coffee growing areas in many parts of the world.
Coffee Futures
On the trading floor coffee futures have jumped to more than 40 percent in the last year, according to a CNBC stock market article, and it is expected that your cup-of-Joe will be pricier due to a smaller than normal crop in 2011. The highest quality beans are in "very tight" supply. To make matters worse, increases in prices of oil products only accentuate increased production costs for agricultural products such as coffee.
Copyright Giovanna De Gennaro. Contact the author to obtain permission for republication.
Coffee sector needs sustainable development strategy
Coffee sector needs sustainable development strategy
(VOV) - A seminar on the sustainable development of Vietnamese coffee was held on March 13 as part of the Buon Ma Thuot Coffee festival.
The seminar, jointly held by the Ministry of Agriculture and Rural Development (MARD), the Vietnam Coffee-Cocoa Association (VIFOCA), and the Dak Lak provincial People’s Committee, were attended by leaders of relevant ministries and agencies as well as domestic and foreign experts.
The paradox of coffee export
Speaking at the seminar, Doan Xuan Hoa, Deputy Director General of the MARD Department of Processing and Trade for Agro-Forestry-Fishery Products and Salt Production, said Vietnam’s coffee sector has experienced significant development recently with export turnover increasing from US$483 million in 2000 to US$2.1 billion in 2008, and accounting for about 2 percent of the country’s GDP. He said Vietnamese coffee is exported to more than 80 countries and territories worldwide.
In the Central Highlands, the sector ensures employment for about 1.6 million people and contributes to socio-political stability, he added.
However, Hoa said that the coffee production and exports are still unstable in their quality, quantity, and value. Although Vietnam is the world leading exporter of Robusta coffee with an annual output of about a million tonnes of coffee beans, export revenues still remain low.
Of the 2008-2009 crop, the sector exported more than 1.17 million tonnes of coffee, earning US$1.94 billion, but the export turnover for the 2009-2010 crop was estimated at only US$1.66 billion. In 2010, the Government had to help businesses buy coffee for stockpiling by providing them with capital to help them deal with a possible crisis as coffee price dropped steadily.
It is, therefore, crucial to develop the Vietnam coffee sector sustainably, he said.
Challenges facing sustainable coffee growing
It is no easy task to apply sustainable coffee production in the Central Highlands as most of the coffee plantations are not large enough (2-5 ha). In addition, it will take a long time to change farmers’ attitudes towards coffee cultivation and harvesting.
The weak alliance between farmers and businesses, climate change, and the global financial crisis are also factors affecting the sustainability of the sector.
Hoa proposed policies to help businesses improve their ability to stockpile coffee and support farmers when coffee prices fall. He also said it is necessary to consider coffee processing and exporting a conditional business sector.
Participants at the seminars agreed that a coffee insurance fund should be set up to help replanting the coffee bushes in 30 percent of the coffee growing area. The fund will come from processing and export businesses.
VIFOCA Chairman Luong Van Tu said the association has come up with a project to set up a coffee insurance fund and will integrate it into the sector’s development strategy.
Another issue is that 80 percent of the coffee growing area in Vietnam belongs to individual farmers. Therefore, it is difficult to set up centralized and sustainable production. It is necessary to establish cooperatives and alliances in producing coffee.
Dang Kim Son from the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) under MARD said that it is impossible to develop large-scale production that meets the international standards based on these households. Banks and agricultural workers are unable to bring capital resources to these households to instruct them in the use of machinery.
Son said that there are also other needs such as pesticides, and irrigation. Cooperatives and associations should be established which are closely associated with the farmers and will strengthen cooperation between farmers and producers to create a united bloc.
Development strategy needed for coffee trees and the industry
Tu said that to develop the Vietnamese coffee industry in a sustainable manner, it is necessary to stabilize the coffee growing area at around 500,000 hectares with an output of 1-1.1 million tonnes, and export 1 million tonnes of coffee beans to secure a 15 percent share in the global market. In addition to traditional markets such as Europe, the US, and Japan, the industry should expand to ASEAN nations and China to meet consumer demand and develop the domestic market.
It is also important to create a strategy for cultivating coffee trees and developing the coffee industry soon, as well as strengthening cooperation among coffee growers to protect their rights and maintain reasonable prices for farmers.
It is very urgent that the country improves the export value of its coffee by following advanced technical standards, mobilizing coffee growers to harvest the beans and promoting investment in processing factories to reduce the export of raw coffee.
According to foreign experts from the world’s leading coffee producers such as Brazil and Colombia, in order to develop a sustainable coffee industry, it is essential to create harmony between the environment, prices and other economic interests. According to their experiences in establishing coffee trademarks, it is needed to support coffee producers with capital, improve the competitive edge and stabilize prices in the domestic market. Resolving such issues will lay the foundation for a sustainable Vietnamese coffee industry.
(VOV) - A seminar on the sustainable development of Vietnamese coffee was held on March 13 as part of the Buon Ma Thuot Coffee festival.
The seminar, jointly held by the Ministry of Agriculture and Rural Development (MARD), the Vietnam Coffee-Cocoa Association (VIFOCA), and the Dak Lak provincial People’s Committee, were attended by leaders of relevant ministries and agencies as well as domestic and foreign experts.
The paradox of coffee export
Speaking at the seminar, Doan Xuan Hoa, Deputy Director General of the MARD Department of Processing and Trade for Agro-Forestry-Fishery Products and Salt Production, said Vietnam’s coffee sector has experienced significant development recently with export turnover increasing from US$483 million in 2000 to US$2.1 billion in 2008, and accounting for about 2 percent of the country’s GDP. He said Vietnamese coffee is exported to more than 80 countries and territories worldwide.
In the Central Highlands, the sector ensures employment for about 1.6 million people and contributes to socio-political stability, he added.
However, Hoa said that the coffee production and exports are still unstable in their quality, quantity, and value. Although Vietnam is the world leading exporter of Robusta coffee with an annual output of about a million tonnes of coffee beans, export revenues still remain low.
Of the 2008-2009 crop, the sector exported more than 1.17 million tonnes of coffee, earning US$1.94 billion, but the export turnover for the 2009-2010 crop was estimated at only US$1.66 billion. In 2010, the Government had to help businesses buy coffee for stockpiling by providing them with capital to help them deal with a possible crisis as coffee price dropped steadily.
It is, therefore, crucial to develop the Vietnam coffee sector sustainably, he said.
Challenges facing sustainable coffee growing
It is no easy task to apply sustainable coffee production in the Central Highlands as most of the coffee plantations are not large enough (2-5 ha). In addition, it will take a long time to change farmers’ attitudes towards coffee cultivation and harvesting.
The weak alliance between farmers and businesses, climate change, and the global financial crisis are also factors affecting the sustainability of the sector.
Hoa proposed policies to help businesses improve their ability to stockpile coffee and support farmers when coffee prices fall. He also said it is necessary to consider coffee processing and exporting a conditional business sector.
Participants at the seminars agreed that a coffee insurance fund should be set up to help replanting the coffee bushes in 30 percent of the coffee growing area. The fund will come from processing and export businesses.
VIFOCA Chairman Luong Van Tu said the association has come up with a project to set up a coffee insurance fund and will integrate it into the sector’s development strategy.
Another issue is that 80 percent of the coffee growing area in Vietnam belongs to individual farmers. Therefore, it is difficult to set up centralized and sustainable production. It is necessary to establish cooperatives and alliances in producing coffee.
Dang Kim Son from the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) under MARD said that it is impossible to develop large-scale production that meets the international standards based on these households. Banks and agricultural workers are unable to bring capital resources to these households to instruct them in the use of machinery.
Son said that there are also other needs such as pesticides, and irrigation. Cooperatives and associations should be established which are closely associated with the farmers and will strengthen cooperation between farmers and producers to create a united bloc.
Development strategy needed for coffee trees and the industry
Tu said that to develop the Vietnamese coffee industry in a sustainable manner, it is necessary to stabilize the coffee growing area at around 500,000 hectares with an output of 1-1.1 million tonnes, and export 1 million tonnes of coffee beans to secure a 15 percent share in the global market. In addition to traditional markets such as Europe, the US, and Japan, the industry should expand to ASEAN nations and China to meet consumer demand and develop the domestic market.
It is also important to create a strategy for cultivating coffee trees and developing the coffee industry soon, as well as strengthening cooperation among coffee growers to protect their rights and maintain reasonable prices for farmers.
It is very urgent that the country improves the export value of its coffee by following advanced technical standards, mobilizing coffee growers to harvest the beans and promoting investment in processing factories to reduce the export of raw coffee.
According to foreign experts from the world’s leading coffee producers such as Brazil and Colombia, in order to develop a sustainable coffee industry, it is essential to create harmony between the environment, prices and other economic interests. According to their experiences in establishing coffee trademarks, it is needed to support coffee producers with capital, improve the competitive edge and stabilize prices in the domestic market. Resolving such issues will lay the foundation for a sustainable Vietnamese coffee industry.
Starbucks CEO Howard Schultz discusses turnaround
Starbucks CEO Howard Schultz discusses turnaround
As Starbucks approaches its 40th birthday later this month, its profits and share price have bounced back. It's a Wall Street darling again, thanks to new products like instant coffee, a new strategy that focuses on international growth, and a quarterly dividend.
By Melissa Allison
Seattle Times business reporter
JOHN LOK / THE SEATTLE TIMES
Howard Schultz, CEO of Starbucks, gives an interview to a television station in a new Starbucks on the 8th floor of company headquarters.
Related
Archive | Starbucks co-founder Bowker talks about early days, launching Redhook and Seattle Weekly, too
Starbucks at 40
Birth date: March 30, 1971
Mission: "To inspire and nurture the human spirit — one person, one cup and one neighborhood at a time."
Size: 17,000 shops in 55 countries, including more than 11,000 in the U.S.
Employees: About 137,000, down from 176,000 in 2008. About 3,000 work at its Seattle headquarters.
Profit: $946 million for the year ended Oct. 2010, up from $316 million two years earlier
Source: Starbucks
Three years ago, Starbucks was in desperate shape.
Profits were falling, and Howard Schultz returned as CEO to save a company he had built from a small chain to a juggernaut with thousands of stores worldwide.
He made painful cuts, including closing 900 stores and slashing thousands of jobs.
Now, as Starbucks approaches its 40th birthday later this month, its profits and share price have bounced back.
The reasons for its return as a Wall Street darling include products like instant coffee, a strategy that focuses on international growth and a willingness to give shareholders a quarterly dividend.
Schultz's book about Starbucks' recent odyssey, "Onward: How Starbucks Fought for Its Life without Losing Its Soul," comes out March 29.
Shortly before unveiling a new logo on Starbucks' headquarters building in Sodo last week, he talked about the challenges of coffee prices, the health-care overhaul and recycling. Here are edited excerpts:
Q: Does climate change present a problem for Starbucks?
A: About a year ago, when we solidified the long-term relationship with Conservation International, that gave us more insight and more resources to both understand the challenges of the day and for us to try and participate as much as possible in taking steps to improve the situation. I wouldn't categorize it as a problem but an ongoing challenge and hopefully an opportunity.
Q: What's the opportunity?
A: In many places where coffee is grown, deforestation is a major issue. With Starbucks' position in the marketplace and the respect and relationships we have, we can — and have in some cases — been able to educate and influence people. Something else is important. What we want to do — and our responsibility — is to constantly ask the question, "Are we making our people proud to wear the green apron?" Sometimes, though, I think whenever a company like Starbucks tries to lead with its heart and do the right thing, you have to ask yourself, "Why are we held to a higher standard?" And I think it's because we try and do the right thing, where perhaps other companies are not engaged at the level we are.
Q: Since you that brought up, why do you publicize your good works?
A: We do a partner [employee] survey consistently about the culture issues and the trust issues and how we're doing as a company. And one of the primary things people tell us is, "Why aren't we telling the world all the good things we're doing?"
I don't think that we are a marketing-driven organization. Candidly, we try and do the right thing not because of creating press. We try and do the right thing to help the community... . If I look at all the things we do, the things that perhaps we promote are de minimis compared to the works that we do around the world that no one knows about.
Q: How are you feeling about the economy these days?
A: Managing a business, small or large, today requires an extremely disciplined, thoughtful approach with regard to the pressure that people are under.
I think one of the ways in which we've tried to overcome that pressure is to provide consistent value for our customers. And the Starbucks gold card and the Starbucks card program really have been a big success in meeting the customer more than halfway and saying, "This is how we can participate with you." I think the economic issues are still fairly fragile. I don't think the recession is over.
Q: How concerned are you about the high cost of coffee?
A:
I'm speaking to suppliers and have visited coffee farms, and I cannot uncover this big problem people are talking about in terms of supply issues.
I think that is a fictitious component of what has happened this year [to coffee], which has been driven primarily by financial speculation, hedge funds, index funds and people who have decided that the basket of commodities is a place where money can be made.
You have to ask yourself, "Why is it that almost every commodity is hovering around record 10-year highs?" It's not an accident. We've seen coffee now — yesterday it was over $2.80. A year ago, it was half that. If this continues, it'll become more challenging for us, as well as every other coffee company.
Because of the economy and the fact that we literally want to put our feet in the shoes of our customers, we don't want to — and have refused to — have an across-the-board price increase. It's something we are trying desperately not to do.
Q: There's a shareholder proposal about recycling again this year. Why don't you have recycling bins in all your stores?
A: Starbucks has stores in America in many, many communities that are governed by many, many different municipalities. Starbucks cannot dictate to a municipality in Cincinnati or Kansas City or Sacramento how or why or when there should be a recycling program. That's one of the primary problems.
On the other side of the equation, we are a buyer of paper goods from very, very large paper companies who have embedded significant capital costs in legacy factories. So when we go to a paper company and say we want a 100 percent recyclable cup or want to change the material — again, we are a buyer of the product, we can't dictate.
We've had two what I would loosely describe as summits in the past couple of years, when we brought all our vendors here to show them the strategic plan that the company has for the near term so they can understand the needs we have to be a very strong corporate citizen in all areas of how we purchase product, food, supplies.
We had a summit of paper suppliers this past year to talk specifically about how we can become a leader in this industry. I think we're getting to the point where we have more influence than we had in the past, but we still are dependent on the suppliers to make the sort of investments that are necessary to overcome this problem. And we're asking them to make it at a very challenging time, which is difficult.
Q: Starbucks was vocal about [wanting] health-care reform. How do you feel about how it worked out?
A: We have been a leader for almost 20 years now in demonstrating our heartfelt commitment to making sure that we provide health coverage for the majority of our people.
That cost last year was $250 million. We have faced double-digit increases for almost five consecutive years with no end in sight.
So, when I was invited to the White House prior to health care being reformed, I was very supportive of the president's plan, primarily because I felt it was literally a fracturing of humanity for almost 50 million Americans not to have health insurance.
There's no plan that would be a perfect plan, but the intent of the bill and the heartfelt commitment to insure the uninsured is the right approach. I think as the bill is currently written and if it was going to land in 2014 under the current guidelines, the pressure on small businesses, because of the mandate, is too great.
Q: Over the years, you've tried to attract more people into your stores in the afternoons. How is that going?
A: With fiscal 2010 being the strongest financial year in our history, and the first quarter, which ended in December the strongest in our 40-year history, there are a lot of compelling reasons — that are enduring — that suggest that the company has been transformed in many ways.
There are more people going into our stores today at different parts of the day.
Q: More traffic in the afternoons?
A: Yes. But being in any retail business today, we cannot embrace the status quo even though we are now succeeding. We have to keep pushing for reinvention and self-renewal. We must.
Q: What about selling beer and wine in the afternoon [as Starbucks does in a handful of stores, including on Olive Way in Seattle]?
A: We'll continue to test that. Olive Way is without a doubt a success. Our international partners want us to expand that internationally. We've been very careful not to move too fast. I don't think we understand it all yet. There will be more, but it will be modest in terms of numbers [of stores].
Q: The new food you introduced today is sweets, not the type of health and wellness offerings you've said you're focused on.
A: It's not one thing versus the other. We have a significant initiative inside the company around health and wellness. All I have to share with you is, stay tuned on that.
Q: Your first book [published in 1997] was about building this company almost from scratch. The new book is about a turnaround. Which was more fun to do — build a company or save one?
A: The entrepreneurial process of building something I think is much more fun.
Transforming a company, though, is more gratifying. Sitting here today having accomplished what we've done in a relatively short period of time, I think the company and our team did our best work. But managing and navigating through a financial crisis is no fun at all.
Q: Why is it more gratifying?
A: If you read the press a couple of years ago, there was a death march about Starbucks.
I think people underestimated the resiliency of the brand and particularly the resiliency of our people. So it's quite gratifying to see the company come back so strong and to demonstrate to our people the pride that we all have in what we've built.
Q: The last time you wrote a book, you retired as CEO about three years later. Does this mean you're headed that way again?
A: What I've told the board is I'm here to really see this through. I don't know what that means, but I'm not leaving anytime soon.
Q: You closed 900 stores and cut thousands of jobs. If you had still been chairman, would you have let [previous CEO] Jim Donald do that?
A: I don't think there would have been a change in the decision. The company was in a desperate situation, but it doesn't in any way remove you from the emotional feeling of making those very tough decisions.
Q: Did Starbucks grow too fast, was it bad real-estate decisions, or the economy, or what?
A: There's never one thing that creates a problem like the one we had, and never one thing that's going to solve it. But I think growth in and of itself does cover up mistakes, and success probably creates a fair amount of hubris.
When I came back, the first week I publicly apologized to everyone in the company because we had let our people down.
Even though I wasn't the CEO, I was the chairman and I was culpable. At the same time, I made a heartfelt promise that day that we would absolutely restore the company back to its glory days, and we have.
Q: How do you reconcile the need to hold onto Starbucks' roots while also growing and even doing things that aren't coffee, like you've talked about lately?
There's been a seismic change in consumer behavior, and it demands innovation and it demands relevancy.
The challenge and the art is for us without question to embrace the core values and the core experience while innovating on the edges, and we'll do that and do it well.
Melissa Allison: 206-464-3312 or mallison@seattletimes.com
As Starbucks approaches its 40th birthday later this month, its profits and share price have bounced back. It's a Wall Street darling again, thanks to new products like instant coffee, a new strategy that focuses on international growth, and a quarterly dividend.
By Melissa Allison
Seattle Times business reporter
JOHN LOK / THE SEATTLE TIMES
Howard Schultz, CEO of Starbucks, gives an interview to a television station in a new Starbucks on the 8th floor of company headquarters.
Related
Archive | Starbucks co-founder Bowker talks about early days, launching Redhook and Seattle Weekly, too
Starbucks at 40
Birth date: March 30, 1971
Mission: "To inspire and nurture the human spirit — one person, one cup and one neighborhood at a time."
Size: 17,000 shops in 55 countries, including more than 11,000 in the U.S.
Employees: About 137,000, down from 176,000 in 2008. About 3,000 work at its Seattle headquarters.
Profit: $946 million for the year ended Oct. 2010, up from $316 million two years earlier
Source: Starbucks
Three years ago, Starbucks was in desperate shape.
Profits were falling, and Howard Schultz returned as CEO to save a company he had built from a small chain to a juggernaut with thousands of stores worldwide.
He made painful cuts, including closing 900 stores and slashing thousands of jobs.
Now, as Starbucks approaches its 40th birthday later this month, its profits and share price have bounced back.
The reasons for its return as a Wall Street darling include products like instant coffee, a strategy that focuses on international growth and a willingness to give shareholders a quarterly dividend.
Schultz's book about Starbucks' recent odyssey, "Onward: How Starbucks Fought for Its Life without Losing Its Soul," comes out March 29.
Shortly before unveiling a new logo on Starbucks' headquarters building in Sodo last week, he talked about the challenges of coffee prices, the health-care overhaul and recycling. Here are edited excerpts:
Q: Does climate change present a problem for Starbucks?
A: About a year ago, when we solidified the long-term relationship with Conservation International, that gave us more insight and more resources to both understand the challenges of the day and for us to try and participate as much as possible in taking steps to improve the situation. I wouldn't categorize it as a problem but an ongoing challenge and hopefully an opportunity.
Q: What's the opportunity?
A: In many places where coffee is grown, deforestation is a major issue. With Starbucks' position in the marketplace and the respect and relationships we have, we can — and have in some cases — been able to educate and influence people. Something else is important. What we want to do — and our responsibility — is to constantly ask the question, "Are we making our people proud to wear the green apron?" Sometimes, though, I think whenever a company like Starbucks tries to lead with its heart and do the right thing, you have to ask yourself, "Why are we held to a higher standard?" And I think it's because we try and do the right thing, where perhaps other companies are not engaged at the level we are.
Q: Since you that brought up, why do you publicize your good works?
A: We do a partner [employee] survey consistently about the culture issues and the trust issues and how we're doing as a company. And one of the primary things people tell us is, "Why aren't we telling the world all the good things we're doing?"
I don't think that we are a marketing-driven organization. Candidly, we try and do the right thing not because of creating press. We try and do the right thing to help the community... . If I look at all the things we do, the things that perhaps we promote are de minimis compared to the works that we do around the world that no one knows about.
Q: How are you feeling about the economy these days?
A: Managing a business, small or large, today requires an extremely disciplined, thoughtful approach with regard to the pressure that people are under.
I think one of the ways in which we've tried to overcome that pressure is to provide consistent value for our customers. And the Starbucks gold card and the Starbucks card program really have been a big success in meeting the customer more than halfway and saying, "This is how we can participate with you." I think the economic issues are still fairly fragile. I don't think the recession is over.
Q: How concerned are you about the high cost of coffee?
A:
I'm speaking to suppliers and have visited coffee farms, and I cannot uncover this big problem people are talking about in terms of supply issues.
I think that is a fictitious component of what has happened this year [to coffee], which has been driven primarily by financial speculation, hedge funds, index funds and people who have decided that the basket of commodities is a place where money can be made.
You have to ask yourself, "Why is it that almost every commodity is hovering around record 10-year highs?" It's not an accident. We've seen coffee now — yesterday it was over $2.80. A year ago, it was half that. If this continues, it'll become more challenging for us, as well as every other coffee company.
Because of the economy and the fact that we literally want to put our feet in the shoes of our customers, we don't want to — and have refused to — have an across-the-board price increase. It's something we are trying desperately not to do.
Q: There's a shareholder proposal about recycling again this year. Why don't you have recycling bins in all your stores?
A: Starbucks has stores in America in many, many communities that are governed by many, many different municipalities. Starbucks cannot dictate to a municipality in Cincinnati or Kansas City or Sacramento how or why or when there should be a recycling program. That's one of the primary problems.
On the other side of the equation, we are a buyer of paper goods from very, very large paper companies who have embedded significant capital costs in legacy factories. So when we go to a paper company and say we want a 100 percent recyclable cup or want to change the material — again, we are a buyer of the product, we can't dictate.
We've had two what I would loosely describe as summits in the past couple of years, when we brought all our vendors here to show them the strategic plan that the company has for the near term so they can understand the needs we have to be a very strong corporate citizen in all areas of how we purchase product, food, supplies.
We had a summit of paper suppliers this past year to talk specifically about how we can become a leader in this industry. I think we're getting to the point where we have more influence than we had in the past, but we still are dependent on the suppliers to make the sort of investments that are necessary to overcome this problem. And we're asking them to make it at a very challenging time, which is difficult.
Q: Starbucks was vocal about [wanting] health-care reform. How do you feel about how it worked out?
A: We have been a leader for almost 20 years now in demonstrating our heartfelt commitment to making sure that we provide health coverage for the majority of our people.
That cost last year was $250 million. We have faced double-digit increases for almost five consecutive years with no end in sight.
So, when I was invited to the White House prior to health care being reformed, I was very supportive of the president's plan, primarily because I felt it was literally a fracturing of humanity for almost 50 million Americans not to have health insurance.
There's no plan that would be a perfect plan, but the intent of the bill and the heartfelt commitment to insure the uninsured is the right approach. I think as the bill is currently written and if it was going to land in 2014 under the current guidelines, the pressure on small businesses, because of the mandate, is too great.
Q: Over the years, you've tried to attract more people into your stores in the afternoons. How is that going?
A: With fiscal 2010 being the strongest financial year in our history, and the first quarter, which ended in December the strongest in our 40-year history, there are a lot of compelling reasons — that are enduring — that suggest that the company has been transformed in many ways.
There are more people going into our stores today at different parts of the day.
Q: More traffic in the afternoons?
A: Yes. But being in any retail business today, we cannot embrace the status quo even though we are now succeeding. We have to keep pushing for reinvention and self-renewal. We must.
Q: What about selling beer and wine in the afternoon [as Starbucks does in a handful of stores, including on Olive Way in Seattle]?
A: We'll continue to test that. Olive Way is without a doubt a success. Our international partners want us to expand that internationally. We've been very careful not to move too fast. I don't think we understand it all yet. There will be more, but it will be modest in terms of numbers [of stores].
Q: The new food you introduced today is sweets, not the type of health and wellness offerings you've said you're focused on.
A: It's not one thing versus the other. We have a significant initiative inside the company around health and wellness. All I have to share with you is, stay tuned on that.
Q: Your first book [published in 1997] was about building this company almost from scratch. The new book is about a turnaround. Which was more fun to do — build a company or save one?
A: The entrepreneurial process of building something I think is much more fun.
Transforming a company, though, is more gratifying. Sitting here today having accomplished what we've done in a relatively short period of time, I think the company and our team did our best work. But managing and navigating through a financial crisis is no fun at all.
Q: Why is it more gratifying?
A: If you read the press a couple of years ago, there was a death march about Starbucks.
I think people underestimated the resiliency of the brand and particularly the resiliency of our people. So it's quite gratifying to see the company come back so strong and to demonstrate to our people the pride that we all have in what we've built.
Q: The last time you wrote a book, you retired as CEO about three years later. Does this mean you're headed that way again?
A: What I've told the board is I'm here to really see this through. I don't know what that means, but I'm not leaving anytime soon.
Q: You closed 900 stores and cut thousands of jobs. If you had still been chairman, would you have let [previous CEO] Jim Donald do that?
A: I don't think there would have been a change in the decision. The company was in a desperate situation, but it doesn't in any way remove you from the emotional feeling of making those very tough decisions.
Q: Did Starbucks grow too fast, was it bad real-estate decisions, or the economy, or what?
A: There's never one thing that creates a problem like the one we had, and never one thing that's going to solve it. But I think growth in and of itself does cover up mistakes, and success probably creates a fair amount of hubris.
When I came back, the first week I publicly apologized to everyone in the company because we had let our people down.
Even though I wasn't the CEO, I was the chairman and I was culpable. At the same time, I made a heartfelt promise that day that we would absolutely restore the company back to its glory days, and we have.
Q: How do you reconcile the need to hold onto Starbucks' roots while also growing and even doing things that aren't coffee, like you've talked about lately?
There's been a seismic change in consumer behavior, and it demands innovation and it demands relevancy.
The challenge and the art is for us without question to embrace the core values and the core experience while innovating on the edges, and we'll do that and do it well.
Melissa Allison: 206-464-3312 or mallison@seattletimes.com
A Changed Starbucks. A Changed C.E.O.
March 12, 2011
A Changed Starbucks. A Changed C.E.O.
By CLAIRE CAIN MILLER
SEATTLE
RAISE your hand if you remember when Starbucks seemed cool.
Anyone?
Think back. To before the planet groaned with 17,000 Starbucks shops. Before the pumpkin spice lattes and the Ciao Amore CDs. Before the Strawberries & Crème Frappuccino ice cream, the Starbucks cream liqueur, the Pinkberry-inspired Sorbetto.
In short, to before Howard D. Schultz and his trenta-size ambition turned a few coffeehouses here into the vast corporate Empire of the Bean.
The world has often seemed three espressos behind Mr. Schultz — which is why the low-key guy sitting in his office here doesn’t quite seem like Howard Schultz.
Did he just say “but”? As in, “We have won in many ways, but ...”? Was that a “we” instead of an “I”? A note of humility?
Yes, this is Howard Schultz: the man who willed Starbucks onto so many street corners — and then, for a moment, looked as if he might lose it all.
Not even Mr. Schultz could have predicted how Starbucks would change our culture when its first shop opened here, in Pike Place Market, on March 30, 1971. Like it or not, Starbucks became, for many of us, what we talk about when we talk about coffee. It changed how we drink it (on a sofa, with Wi-Fi, or on the subway), how we order it (“for here, grande, two-pump vanilla, skinny extra hot latte”) and what we are willing to pay for it ($4.30 for the aforementioned in Manhattan).
But during the depths of the recession, Starbucks nearly drowned in its caramel macchiato. After decades of breakneck expansion under Mr. Schultz, tight-fisted consumers abandoned it. The company’s sales and share price sank so low that insiders worried Starbucks might become a takeover target.
So, after an eight-year hiatus, an alarmed Mr. Schultz returned as chief executive in January 2008. He shut 900 shops, mostly in the United States, drastically cut costs and put the company back on course.
Friends and colleagues say this hellish experience left Mr. Schultz a changed man. Starbucks, these people say, is no longer “The Howard Schultz Show.” The adjective that many use to characterize his new self is “humble” — a word that few would have applied to him before.
“Everything Starbucks did in the past, more or less, had worked,” Mr. Schultz said in an interview in January at the company’s headquarters, with a view of Puget Sound south of downtown Seattle. “Every store we opened was successful, every city, every country.”
He continued: “Growth had a life of its own — and that’s O.K., when you’re hitting the cover off the ball every time, but at some point, nothing lasts forever.”
One thing hasn’t changed: the man dreams big. In that same interview, Mr. Schultz spoke of expanding into still more products and in markets like China. He is pushing, of all things, a brand of instant coffee. The words “Starbucks Coffee” were just removed from the company’s green mermaid logo because he wants to waltz his brand up and down the grocery aisles. On Thursday, he announced that the company had struck a deal with Green Mountain Coffee Roasters to distribute Starbucks coffee and teas for Keurig single-serving systems. Shares of Starbucks jumped nearly 10 percent on the news, reaching their highest level since 2006. The stock closed at $36.56 on Friday.
Mr. Schultz and his colleagues say Starbucks will keep its feet on the ground this time, but some outsiders have doubts. Detractors say Starbucks long ago ceded its role as a gourmet tastemaker to become a “billions-and-billions served” chain like McDonald’s. Starbucks — “Charbucks,” to those who complain that its heavily roasted coffee tastes burned — will never rekindle the old romance, these people say.
“Has anybody said they came back because people love the coffee again?” asks Bryant Simon, a history professor at Temple University and author of “Everything but the Coffee: Learning About America From Starbucks.”
“They came back because they’re remaking themselves as a brand that competes on value, largely — a brand that’s everywhere, easily accessible, predictable,” Mr. Simon says.
HOWARD SCHULTZ, now 57, is a tall, sinewy man with a toothy grin and a silky sales pitch. He rarely sticks to script, preferring to speak off the cuff, whatever his audience. In conversations, he leans in, locks eyes and gives the impression that, right now, there is no one else in the world he would rather be talking to. When he speaks of “soul” and “authenticity” and “love,” you could almost forget that he runs a multibillion-dollar business that has become an uneasy symbol of globalization. Or that the British actor Rupert Everett once likened Starbucks to a metastasizing cancer.
The story of Mr. Schultz’s life and career has been told many times, not least by Mr. Schultz. (His second book, “Onward: How Starbucks Fought for Its Life Without Losing Its Soul,” is to be published on March 29.) But some highlights bear repeating:
He grew up poor in the Bay View housing projects in Canarsie, Brooklyn, received a football scholarship to Northern Michigan University and, after a variety of jobs, joined the fledging Starbucks in 1982, as head of marketing. Inspired by Italy’s coffee culture, he left Starbucks and opened his own coffee shop. Then, in 1987, he bought Starbucks, which at the time had all of six shops. By 1995, Starbucks had 677 shops. By 2000, it had 3,501, and that year Mr. Schultz stepped aside as C.E.O.
And so it went for Starbucks, one success after another, until the recession hit and exposed the company’s overreach to the world.
In December 2007, Mr. Schultz was worried that the Starbucks brand was losing its luster, and he and the board decided that in the new year, they would push aside Jim Donald and announce that Mr. Schultz would return as C.E.O. That month, Mr. Schultz, his wife, Sheri, and their two children flew to Hawaii for their annual getaway.
But on the beach in Kona, he just couldn’t relax. He kept checking the company’s daily sales figures and was horrified to see that they were falling by double digits.
Also in Hawaii then was his friend Michael Dell, who had recently returned to run Dell Inc. On a long bicycle ride along the coast, Mr. Dell told Mr. Schultz that when he returned to Dell, he wrote what he called a “transformational agenda.” Mr. Schultz then created his own plan for Starbucks.
His goals were to fix troubled stores, to rekindle an emotional attachment with customers and to make longer-term changes like reorganizing executives and revamping the supply chain.
He returned to Seattle, handed copies of his plan to the company’s senior executives and posed the big question: Are you in, or are you out? Eight of those top 10 executives have since departed.
“What the company needed then was what he used to be to us — the innovation, the refusal to not be a champion,” says Troy Alstead, the chief financial officer. “A lot of people were questioning, in that span before he came back, ‘Were we done?’ And Howard came back, and it wasn’t even a question anymore.”
MR. SCHULTZ usually rises at 4 a.m., without an alarm, downs a Starbucks Sumatran coffee at home, followed by a short double latte or espresso macchiato from one of two Starbucks stores he visits on his way to work. He arrives in his office by 6:30.
Friends and colleagues agree that he is as fanatical as ever about Starbucks. Millard Drexler, the chief executive of J. Crew, recently e-mailed Mr. Schultz to complain that the coffee lids at a Starbucks on Astor Place in Manhattan kept spilling coffee on his shirt. Mr. Schultz’s reply: “On it.”
Mr. Drexler, who has a habit of e-mailing C.E.O.’s with complaints, says: “I can give you many more examples when they say, ‘I’ll send this to a research department or a gatekeeper.’ ” But, he says of Starbucks, “to have that kind of quality control they have around the world is pretty extraordinary.”
It was on such a morning in early 2008 that Mr. Schultz was convinced he had a product that would re-energize the company’s tired sales. It was called Sorbetto after the Italian for “sorbet,” and the drink was a twist on Pinkberry, the frozen yogurt chain in which Mr. Schultz is an investor.
Mr. Schultz had flown to Italy to taste the ingredients of his new product and thought he had the next Frappuccino. By that summer, 300 Starbucks locations in California were bathed in pink to promote the new drink. Starbucks had shipped in ingredients from Italy, and Mr. Schultz had primed investors.
But customers didn’t like the sugary concoction. And neither did Starbucks baristas, who had to spend an hour and a half cleaning the Sorbetto machines at the end of their shifts. A few months later, Mr. Schultz abandoned Sorbetto.
“Sorbetto, we did too quickly, and that was my fault,” Mr. Schultz says.
The headlong introduction was a mistake, but it was also classic Schultz.
“He likes things moving quickly, he likes people to be decisive, he’s got this energy level, this need for driving and for winning, and I think at times it’s hard for some people to keep up,” says Michelle Gass, the president of Seattle’s Best Coffee, which Starbucks owns. After his missteps, Ms. Gass says, Mr. Schultz has become more disciplined and a better listener.
Mr. Schultz concedes that he can no longer run Starbucks through the Cult of Howard. And he readily acknowledges that he badly misread the economy and underestimated the extent to which his customers would pull back during the recession.
At the time, he says, he had a hard time accepting that Starbucks would become a poster child for excess.
After his return, he halted new store openings and, with a P.R. flourish, closed every Starbucks in the nation for three hours to retrain baristas. The chain ran its biggest ad campaign ever, emphasizing the quality and freshness of its coffee. It ordered baristas to dump brewed coffee after 30 minutes.
But growth in same-store sales dipped below zero for the first time ever, and the company’s share price kept falling. It was a new feeling for Mr. Schultz, like the A student who breezes into college and then gets C’s.
Executives concluded that Starbucks had to close 200 American shops. The board suggested 600. Executives said that if sales and the economy got worse, they would also cut $400 million in costs. The board said no, let’s start cutting costs immediately, while closing locations. Starbucks ultimately closed 900 locations worldwide and cut $580 million in costs. As the decline in same-store sales neared 10 percent, board members asked executives to model what would happen if the sales slide hit 20 percent — which once would have been unthinkable.
“Nobody knew where the bottom was,” recalls James G. Shennan Jr., a venture capitalist who has been on the company’s board since 1990. “The general agreement around the table was we better have the doomsday plan.”
In December 2008, almost a year after he returned as C.E.O., Mr. Schultz flew to New York on the company jet. He and his team were scheduled to meet with analysts from Wall Street, where Mr. Schultz, once a darling, was now being doubted as never before.
On the plane, he reviewed the grim quarterly numbers: Profits were underwhelming, and holiday sales looked dreadful. Just before the meeting, the company’s chief financial officer, Pete Bocian, resigned.
Mr. Schultz reread the script for the presentation — and didn’t like what he saw. He worried that the stock price might drop so low that someone would swoop in and buy the company.
He summoned his executives to his Fifth Avenue apartment. Late into the night, around the dining room table, they revised the presentation.
The next day, as the executives rehearsed, Mr. Schultz kept interrupting. Vivek Varma, who had recently joined Starbucks as head of public affairs, told him that he should leave.
No one could remember anyone talking like that to Mr. Schultz. But he left. The next day, he and the other executives painted a somber picture for analysts and laid out the recovery plans. Rather than plunge, the company’s share price rose 20 cents that day.
Over the next year, Starbucks made much deeper and more difficult changes than Mr. Schultz had originally envisioned. By April 2009, same-store sales, though still down from a year earlier, were finally rising. By the holidays, they had turned positive.
INSTANT coffee: the very words leave a bad taste in many people’s mouths. But Starbucks has been developing instant coffee in earnest since 2006. Mr. Schultz says his industry considers instant a “death category.” It is, however, a $20 billion one.
Before he returned, Mr. Schultz complained that if Apple could develop the iPod in less than a year, Starbucks could surely develop an instant coffee in that time. Finally, in January 2009, the new product, Via, was scheduled for a full-scale introduction.
But there was a problem: market research was showing that skeptical customers needed a lesson about instant coffee. Some executives worried that a big rollout might flop. Ms. Gass and a few others told Mr. Schultz that Starbucks should delay Via and introduce it in two cities before going national.
“That was hard for him,” Ms. Gass says. But rather than overrule his executives, as he might have in the past, Mr. Schultz agreed. It turned out to be the right decision. After testing Via in Seattle and Chicago, Starbucks rewrote the plan for a nationwide introduction. For instance, instead of just giving away free samples, which customers forgot in the bottom of their briefcases, purses and backpacks, it prepared Via in the stores and gave customers a blind taste test.
In 2010, sales of Via were over $200 million. The instant coffee is now also sold in grocery stores and in Britain, Canada, Japan and the Philippines.
The methodical introduction of Via offered a sharp contrast to the old Howard Schultz whose gut told him — wrongly — that Sorbetto would be a winner. But he has also gone so far as to embrace big-company ideas like focus groups, which he used to shun. Delegating, and accepting other people’s conclusions, is now easier for him. “There’s been more arguing, challenging and debate in the last two to three years than there’s ever been,” says Mr. Alstead, the chief financial officer.
Mr. Schultz’s take: “What leadership means is the courage it takes to talk about things that, in the past, perhaps we wouldn’t have, because I’m not right all the time.”
Born entrepreneurs are not necessarily born managers. You need creativity and drive to start a company, discipline and delegation to run one. In the last year, people who work closely with Mr. Schultz say, he has shown he can make the leap.
Perhaps the bigger question is whether Mr. Schultz can, as he likes to say, preserve Starbucks’s soul, or whatever soul it has left. In a switch, the company is designing new stores with local woods, furniture and art, to make them feel more like a neighborhood shop. It is also buying specialty beans in limited supply, as artisanal shops do.
Whether Starbucks can recapture a neighborhood feel, as Mr. Schultz insists, is anyone’s guess. For many people, especially in areas where carefully made, lighter-roast coffee from the likes of Stumptown and Intelligentsia is trendy, Starbucks has become a place to go for free Wi-Fi, or to use the restroom, or to buy a coffee on the go.
There is a market for a convenient coffee chain, as the recent Starbucks sales rebound shows. But some customers and analysts say that the mass-market approach conflicts with Mr. Schultz’s vision of a global giant that somehow feels local everywhere.
Mr. Simon of Temple University says: “When you’re selling stuff people don’t need, you’ve got to be selling something else, and that’s what Starbucks lost. There’s a kind of dissonance between the messaging and the actual practice.”
Mr. Schultz no longer plans to blanket the United States with new Starbucks stores, sometimes with multiple locations on one block — a practice that inspired a contest on Flickr to see how many Starbucks shops people could fit into a single photograph. Instead, like so many other executives, he has his sights on China. Starbucks already has roughly 430 stores in mainland China and plans to have 1,500 there by 2015. India beckons as well. The company also plans to sell a wider variety of drinks and foods in grocery stores and its own shops, like Kind fruit and nut bars, which Starbucks put on the map.
IT may be difficult to believe, but there was a time when McDonald’s was a novelty. But, like Ray Kroc, who took over a small hamburger business and built it into the most successful fast food operation in the world, Mr. Schultz has learned that growth can be seductive, and that it can exact a price.
Starbucks and its leader are more measured than during his last stint in the corner office. “I think we are very conscious of the things that we have done wrong over the years, particularly when we just got caught up in the growth phase,” says Mr. Shennan, the Starbucks director. “We are not going to do that again under Howard’s management, I tell you, or the current board’s.”
In January, three years after his return, Mr. Schultz stood before 1,100 employees at the headquarters here. Three thousand more from around the world were patched in via Webcast. The company had finished its strongest holiday season ever, and Mr. Schultz had just unveiled its new, “coffee”-less logo. Yet his words were laced with caution.
“We have won in many ways,” he said, “but I feel it’s so important to remind us all of how fleeting success and winning can be.”
A Changed Starbucks. A Changed C.E.O.
By CLAIRE CAIN MILLER
SEATTLE
RAISE your hand if you remember when Starbucks seemed cool.
Anyone?
Think back. To before the planet groaned with 17,000 Starbucks shops. Before the pumpkin spice lattes and the Ciao Amore CDs. Before the Strawberries & Crème Frappuccino ice cream, the Starbucks cream liqueur, the Pinkberry-inspired Sorbetto.
In short, to before Howard D. Schultz and his trenta-size ambition turned a few coffeehouses here into the vast corporate Empire of the Bean.
The world has often seemed three espressos behind Mr. Schultz — which is why the low-key guy sitting in his office here doesn’t quite seem like Howard Schultz.
Did he just say “but”? As in, “We have won in many ways, but ...”? Was that a “we” instead of an “I”? A note of humility?
Yes, this is Howard Schultz: the man who willed Starbucks onto so many street corners — and then, for a moment, looked as if he might lose it all.
Not even Mr. Schultz could have predicted how Starbucks would change our culture when its first shop opened here, in Pike Place Market, on March 30, 1971. Like it or not, Starbucks became, for many of us, what we talk about when we talk about coffee. It changed how we drink it (on a sofa, with Wi-Fi, or on the subway), how we order it (“for here, grande, two-pump vanilla, skinny extra hot latte”) and what we are willing to pay for it ($4.30 for the aforementioned in Manhattan).
But during the depths of the recession, Starbucks nearly drowned in its caramel macchiato. After decades of breakneck expansion under Mr. Schultz, tight-fisted consumers abandoned it. The company’s sales and share price sank so low that insiders worried Starbucks might become a takeover target.
So, after an eight-year hiatus, an alarmed Mr. Schultz returned as chief executive in January 2008. He shut 900 shops, mostly in the United States, drastically cut costs and put the company back on course.
Friends and colleagues say this hellish experience left Mr. Schultz a changed man. Starbucks, these people say, is no longer “The Howard Schultz Show.” The adjective that many use to characterize his new self is “humble” — a word that few would have applied to him before.
“Everything Starbucks did in the past, more or less, had worked,” Mr. Schultz said in an interview in January at the company’s headquarters, with a view of Puget Sound south of downtown Seattle. “Every store we opened was successful, every city, every country.”
He continued: “Growth had a life of its own — and that’s O.K., when you’re hitting the cover off the ball every time, but at some point, nothing lasts forever.”
One thing hasn’t changed: the man dreams big. In that same interview, Mr. Schultz spoke of expanding into still more products and in markets like China. He is pushing, of all things, a brand of instant coffee. The words “Starbucks Coffee” were just removed from the company’s green mermaid logo because he wants to waltz his brand up and down the grocery aisles. On Thursday, he announced that the company had struck a deal with Green Mountain Coffee Roasters to distribute Starbucks coffee and teas for Keurig single-serving systems. Shares of Starbucks jumped nearly 10 percent on the news, reaching their highest level since 2006. The stock closed at $36.56 on Friday.
Mr. Schultz and his colleagues say Starbucks will keep its feet on the ground this time, but some outsiders have doubts. Detractors say Starbucks long ago ceded its role as a gourmet tastemaker to become a “billions-and-billions served” chain like McDonald’s. Starbucks — “Charbucks,” to those who complain that its heavily roasted coffee tastes burned — will never rekindle the old romance, these people say.
“Has anybody said they came back because people love the coffee again?” asks Bryant Simon, a history professor at Temple University and author of “Everything but the Coffee: Learning About America From Starbucks.”
“They came back because they’re remaking themselves as a brand that competes on value, largely — a brand that’s everywhere, easily accessible, predictable,” Mr. Simon says.
HOWARD SCHULTZ, now 57, is a tall, sinewy man with a toothy grin and a silky sales pitch. He rarely sticks to script, preferring to speak off the cuff, whatever his audience. In conversations, he leans in, locks eyes and gives the impression that, right now, there is no one else in the world he would rather be talking to. When he speaks of “soul” and “authenticity” and “love,” you could almost forget that he runs a multibillion-dollar business that has become an uneasy symbol of globalization. Or that the British actor Rupert Everett once likened Starbucks to a metastasizing cancer.
The story of Mr. Schultz’s life and career has been told many times, not least by Mr. Schultz. (His second book, “Onward: How Starbucks Fought for Its Life Without Losing Its Soul,” is to be published on March 29.) But some highlights bear repeating:
He grew up poor in the Bay View housing projects in Canarsie, Brooklyn, received a football scholarship to Northern Michigan University and, after a variety of jobs, joined the fledging Starbucks in 1982, as head of marketing. Inspired by Italy’s coffee culture, he left Starbucks and opened his own coffee shop. Then, in 1987, he bought Starbucks, which at the time had all of six shops. By 1995, Starbucks had 677 shops. By 2000, it had 3,501, and that year Mr. Schultz stepped aside as C.E.O.
And so it went for Starbucks, one success after another, until the recession hit and exposed the company’s overreach to the world.
In December 2007, Mr. Schultz was worried that the Starbucks brand was losing its luster, and he and the board decided that in the new year, they would push aside Jim Donald and announce that Mr. Schultz would return as C.E.O. That month, Mr. Schultz, his wife, Sheri, and their two children flew to Hawaii for their annual getaway.
But on the beach in Kona, he just couldn’t relax. He kept checking the company’s daily sales figures and was horrified to see that they were falling by double digits.
Also in Hawaii then was his friend Michael Dell, who had recently returned to run Dell Inc. On a long bicycle ride along the coast, Mr. Dell told Mr. Schultz that when he returned to Dell, he wrote what he called a “transformational agenda.” Mr. Schultz then created his own plan for Starbucks.
His goals were to fix troubled stores, to rekindle an emotional attachment with customers and to make longer-term changes like reorganizing executives and revamping the supply chain.
He returned to Seattle, handed copies of his plan to the company’s senior executives and posed the big question: Are you in, or are you out? Eight of those top 10 executives have since departed.
“What the company needed then was what he used to be to us — the innovation, the refusal to not be a champion,” says Troy Alstead, the chief financial officer. “A lot of people were questioning, in that span before he came back, ‘Were we done?’ And Howard came back, and it wasn’t even a question anymore.”
MR. SCHULTZ usually rises at 4 a.m., without an alarm, downs a Starbucks Sumatran coffee at home, followed by a short double latte or espresso macchiato from one of two Starbucks stores he visits on his way to work. He arrives in his office by 6:30.
Friends and colleagues agree that he is as fanatical as ever about Starbucks. Millard Drexler, the chief executive of J. Crew, recently e-mailed Mr. Schultz to complain that the coffee lids at a Starbucks on Astor Place in Manhattan kept spilling coffee on his shirt. Mr. Schultz’s reply: “On it.”
Mr. Drexler, who has a habit of e-mailing C.E.O.’s with complaints, says: “I can give you many more examples when they say, ‘I’ll send this to a research department or a gatekeeper.’ ” But, he says of Starbucks, “to have that kind of quality control they have around the world is pretty extraordinary.”
It was on such a morning in early 2008 that Mr. Schultz was convinced he had a product that would re-energize the company’s tired sales. It was called Sorbetto after the Italian for “sorbet,” and the drink was a twist on Pinkberry, the frozen yogurt chain in which Mr. Schultz is an investor.
Mr. Schultz had flown to Italy to taste the ingredients of his new product and thought he had the next Frappuccino. By that summer, 300 Starbucks locations in California were bathed in pink to promote the new drink. Starbucks had shipped in ingredients from Italy, and Mr. Schultz had primed investors.
But customers didn’t like the sugary concoction. And neither did Starbucks baristas, who had to spend an hour and a half cleaning the Sorbetto machines at the end of their shifts. A few months later, Mr. Schultz abandoned Sorbetto.
“Sorbetto, we did too quickly, and that was my fault,” Mr. Schultz says.
The headlong introduction was a mistake, but it was also classic Schultz.
“He likes things moving quickly, he likes people to be decisive, he’s got this energy level, this need for driving and for winning, and I think at times it’s hard for some people to keep up,” says Michelle Gass, the president of Seattle’s Best Coffee, which Starbucks owns. After his missteps, Ms. Gass says, Mr. Schultz has become more disciplined and a better listener.
Mr. Schultz concedes that he can no longer run Starbucks through the Cult of Howard. And he readily acknowledges that he badly misread the economy and underestimated the extent to which his customers would pull back during the recession.
At the time, he says, he had a hard time accepting that Starbucks would become a poster child for excess.
After his return, he halted new store openings and, with a P.R. flourish, closed every Starbucks in the nation for three hours to retrain baristas. The chain ran its biggest ad campaign ever, emphasizing the quality and freshness of its coffee. It ordered baristas to dump brewed coffee after 30 minutes.
But growth in same-store sales dipped below zero for the first time ever, and the company’s share price kept falling. It was a new feeling for Mr. Schultz, like the A student who breezes into college and then gets C’s.
Executives concluded that Starbucks had to close 200 American shops. The board suggested 600. Executives said that if sales and the economy got worse, they would also cut $400 million in costs. The board said no, let’s start cutting costs immediately, while closing locations. Starbucks ultimately closed 900 locations worldwide and cut $580 million in costs. As the decline in same-store sales neared 10 percent, board members asked executives to model what would happen if the sales slide hit 20 percent — which once would have been unthinkable.
“Nobody knew where the bottom was,” recalls James G. Shennan Jr., a venture capitalist who has been on the company’s board since 1990. “The general agreement around the table was we better have the doomsday plan.”
In December 2008, almost a year after he returned as C.E.O., Mr. Schultz flew to New York on the company jet. He and his team were scheduled to meet with analysts from Wall Street, where Mr. Schultz, once a darling, was now being doubted as never before.
On the plane, he reviewed the grim quarterly numbers: Profits were underwhelming, and holiday sales looked dreadful. Just before the meeting, the company’s chief financial officer, Pete Bocian, resigned.
Mr. Schultz reread the script for the presentation — and didn’t like what he saw. He worried that the stock price might drop so low that someone would swoop in and buy the company.
He summoned his executives to his Fifth Avenue apartment. Late into the night, around the dining room table, they revised the presentation.
The next day, as the executives rehearsed, Mr. Schultz kept interrupting. Vivek Varma, who had recently joined Starbucks as head of public affairs, told him that he should leave.
No one could remember anyone talking like that to Mr. Schultz. But he left. The next day, he and the other executives painted a somber picture for analysts and laid out the recovery plans. Rather than plunge, the company’s share price rose 20 cents that day.
Over the next year, Starbucks made much deeper and more difficult changes than Mr. Schultz had originally envisioned. By April 2009, same-store sales, though still down from a year earlier, were finally rising. By the holidays, they had turned positive.
INSTANT coffee: the very words leave a bad taste in many people’s mouths. But Starbucks has been developing instant coffee in earnest since 2006. Mr. Schultz says his industry considers instant a “death category.” It is, however, a $20 billion one.
Before he returned, Mr. Schultz complained that if Apple could develop the iPod in less than a year, Starbucks could surely develop an instant coffee in that time. Finally, in January 2009, the new product, Via, was scheduled for a full-scale introduction.
But there was a problem: market research was showing that skeptical customers needed a lesson about instant coffee. Some executives worried that a big rollout might flop. Ms. Gass and a few others told Mr. Schultz that Starbucks should delay Via and introduce it in two cities before going national.
“That was hard for him,” Ms. Gass says. But rather than overrule his executives, as he might have in the past, Mr. Schultz agreed. It turned out to be the right decision. After testing Via in Seattle and Chicago, Starbucks rewrote the plan for a nationwide introduction. For instance, instead of just giving away free samples, which customers forgot in the bottom of their briefcases, purses and backpacks, it prepared Via in the stores and gave customers a blind taste test.
In 2010, sales of Via were over $200 million. The instant coffee is now also sold in grocery stores and in Britain, Canada, Japan and the Philippines.
The methodical introduction of Via offered a sharp contrast to the old Howard Schultz whose gut told him — wrongly — that Sorbetto would be a winner. But he has also gone so far as to embrace big-company ideas like focus groups, which he used to shun. Delegating, and accepting other people’s conclusions, is now easier for him. “There’s been more arguing, challenging and debate in the last two to three years than there’s ever been,” says Mr. Alstead, the chief financial officer.
Mr. Schultz’s take: “What leadership means is the courage it takes to talk about things that, in the past, perhaps we wouldn’t have, because I’m not right all the time.”
Born entrepreneurs are not necessarily born managers. You need creativity and drive to start a company, discipline and delegation to run one. In the last year, people who work closely with Mr. Schultz say, he has shown he can make the leap.
Perhaps the bigger question is whether Mr. Schultz can, as he likes to say, preserve Starbucks’s soul, or whatever soul it has left. In a switch, the company is designing new stores with local woods, furniture and art, to make them feel more like a neighborhood shop. It is also buying specialty beans in limited supply, as artisanal shops do.
Whether Starbucks can recapture a neighborhood feel, as Mr. Schultz insists, is anyone’s guess. For many people, especially in areas where carefully made, lighter-roast coffee from the likes of Stumptown and Intelligentsia is trendy, Starbucks has become a place to go for free Wi-Fi, or to use the restroom, or to buy a coffee on the go.
There is a market for a convenient coffee chain, as the recent Starbucks sales rebound shows. But some customers and analysts say that the mass-market approach conflicts with Mr. Schultz’s vision of a global giant that somehow feels local everywhere.
Mr. Simon of Temple University says: “When you’re selling stuff people don’t need, you’ve got to be selling something else, and that’s what Starbucks lost. There’s a kind of dissonance between the messaging and the actual practice.”
Mr. Schultz no longer plans to blanket the United States with new Starbucks stores, sometimes with multiple locations on one block — a practice that inspired a contest on Flickr to see how many Starbucks shops people could fit into a single photograph. Instead, like so many other executives, he has his sights on China. Starbucks already has roughly 430 stores in mainland China and plans to have 1,500 there by 2015. India beckons as well. The company also plans to sell a wider variety of drinks and foods in grocery stores and its own shops, like Kind fruit and nut bars, which Starbucks put on the map.
IT may be difficult to believe, but there was a time when McDonald’s was a novelty. But, like Ray Kroc, who took over a small hamburger business and built it into the most successful fast food operation in the world, Mr. Schultz has learned that growth can be seductive, and that it can exact a price.
Starbucks and its leader are more measured than during his last stint in the corner office. “I think we are very conscious of the things that we have done wrong over the years, particularly when we just got caught up in the growth phase,” says Mr. Shennan, the Starbucks director. “We are not going to do that again under Howard’s management, I tell you, or the current board’s.”
In January, three years after his return, Mr. Schultz stood before 1,100 employees at the headquarters here. Three thousand more from around the world were patched in via Webcast. The company had finished its strongest holiday season ever, and Mr. Schultz had just unveiled its new, “coffee”-less logo. Yet his words were laced with caution.
“We have won in many ways,” he said, “but I feel it’s so important to remind us all of how fleeting success and winning can be.”
FUTURES FILE: Frothy coffee prices near $3
FUTURES FILE: Frothy coffee prices near $3
By Walt Breitinger Times Business Columnist | Posted: Saturday, March 12, 2011 12:00 am | Loading…
Coffee prices neared $3 per pound this week for the first time in 14 years. Since last June, prices have more than doubled as coffee production out of Central American nations, Brazil and Columbia, have fallen short of expectations.
The low level of production, coupled with strong demand from India, Japan and China, has drained some coffee warehouse supplies to an 11-year low. These factors culminated on Wednesday, pushing prices as high as $2.96 a pound, prompting coffee traders to hope that coffee futures would break above the 1997 high of $3.18 a pound.
Instead, prices crashed on Thursday and Friday, dropping to $2.72 a pound, an 8 percent drop in two days. This week's wild 22-cent range shows how frothy the price of your morning coffee can be. Luckily, many corporations and distributors can reduce their exposure to these headaches by locking in prices months in advance, thereby avoiding the need to change prices daily.
Corn Gets Creamed
King corn had led the commodities rally for the last year, but suffered a significant setback this week, losing more than 70 cents per bushel (10 percent). A Department of Agriculture report released Thursday morning contributed to the decline, as it showed an increase in global grain production, indicating the U.S. grain stocks might not be as tight as previously thought.
The still-high corn prices have encouraged farmers to maximize their corn acreage and to pre-sell this year's crop, locking in prices. Investor selling, alongside a significant drop in crude oil, which fell $6 per barrel this week, also contributed to the drop in corn prices. Soybeans and wheat were pulverized as well, falling 90 cents (7 percent) and $1.30 (16 percent) per bushel, respectively.
Global grain buyers have been shopping around, looking to Southern nations like Brazil, Argentina and Australia as a cheaper source of corn, wheat and soybeans, further undermining U.S. grain prices.
As of midday Friday, corn for May delivery was near $6.67 per bushel, May beans were at $13.37 per bushel and May wheat had ground to $7.26 per bushel.\
Opinions are solely the writer's. Walt Breitinger is the president of Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso. He can be reached at (800) 411-3888 or indianafutures.com. This is not a solicitation of any order to buy or sell, nor does it provide any recommendations regarding the market
By Walt Breitinger Times Business Columnist | Posted: Saturday, March 12, 2011 12:00 am | Loading…
Coffee prices neared $3 per pound this week for the first time in 14 years. Since last June, prices have more than doubled as coffee production out of Central American nations, Brazil and Columbia, have fallen short of expectations.
The low level of production, coupled with strong demand from India, Japan and China, has drained some coffee warehouse supplies to an 11-year low. These factors culminated on Wednesday, pushing prices as high as $2.96 a pound, prompting coffee traders to hope that coffee futures would break above the 1997 high of $3.18 a pound.
Instead, prices crashed on Thursday and Friday, dropping to $2.72 a pound, an 8 percent drop in two days. This week's wild 22-cent range shows how frothy the price of your morning coffee can be. Luckily, many corporations and distributors can reduce their exposure to these headaches by locking in prices months in advance, thereby avoiding the need to change prices daily.
Corn Gets Creamed
King corn had led the commodities rally for the last year, but suffered a significant setback this week, losing more than 70 cents per bushel (10 percent). A Department of Agriculture report released Thursday morning contributed to the decline, as it showed an increase in global grain production, indicating the U.S. grain stocks might not be as tight as previously thought.
The still-high corn prices have encouraged farmers to maximize their corn acreage and to pre-sell this year's crop, locking in prices. Investor selling, alongside a significant drop in crude oil, which fell $6 per barrel this week, also contributed to the drop in corn prices. Soybeans and wheat were pulverized as well, falling 90 cents (7 percent) and $1.30 (16 percent) per bushel, respectively.
Global grain buyers have been shopping around, looking to Southern nations like Brazil, Argentina and Australia as a cheaper source of corn, wheat and soybeans, further undermining U.S. grain prices.
As of midday Friday, corn for May delivery was near $6.67 per bushel, May beans were at $13.37 per bushel and May wheat had ground to $7.26 per bushel.\
Opinions are solely the writer's. Walt Breitinger is the president of Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso. He can be reached at (800) 411-3888 or indianafutures.com. This is not a solicitation of any order to buy or sell, nor does it provide any recommendations regarding the market
Rising Coffee Prices
Rising Coffee Prices
MASON CITY,IA-Many of us start our day with a nice cup of coffee but increasing coffee prices might have you drinking a little less.
Coffee drinker Diane Deike says, "I’ve been drinking coffee for over 37 years. I drink it every day, need the caffeine buzz.”
Coffee drinker Richard Olson says, "every day I drink at Jitters, then I drink at Pros."
These coffee drinkers say they haven't really noticed the higher prices.
But it may be their love of the drink that is blinding them, because the price they pay has already gone up.
Deike says, "it won't be a huge rise not like the price of gas."
A combination of rising world demand and poor harvests in Colombia, Brazil and Latin America has caused a shortage of high-end Arabica coffee beans.
That's likely what's causing the increase.
The International Coffee Organization reports that Arabica coffee prices have risen more than 46 percent over the past six months.
That’s a 34 year high.
But the added expense may be slower to hit smaller establishments.
Olson says, "I’m not sure whether it would affect them as much as it would a big shop. You know where they've got a lot of overhead and turnover."
Local coffee shop owners say they try not to pass the extra expense on to the customer, but at some point they have no choice.
But these coffee lovers say paying more for their brew won't scare them away.
Deike says, "oh I’ll always drink coffee. Oh absolutely. I'll cut other things before I cut out my coffee."
The price of Arabica coffee is now $2.97 a pound.
Coffee traders expect prices to soar past $3.40 a pound and force roasters to raise retail prices again.
MASON CITY,IA-Many of us start our day with a nice cup of coffee but increasing coffee prices might have you drinking a little less.
Coffee drinker Diane Deike says, "I’ve been drinking coffee for over 37 years. I drink it every day, need the caffeine buzz.”
Coffee drinker Richard Olson says, "every day I drink at Jitters, then I drink at Pros."
These coffee drinkers say they haven't really noticed the higher prices.
But it may be their love of the drink that is blinding them, because the price they pay has already gone up.
Deike says, "it won't be a huge rise not like the price of gas."
A combination of rising world demand and poor harvests in Colombia, Brazil and Latin America has caused a shortage of high-end Arabica coffee beans.
That's likely what's causing the increase.
The International Coffee Organization reports that Arabica coffee prices have risen more than 46 percent over the past six months.
That’s a 34 year high.
But the added expense may be slower to hit smaller establishments.
Olson says, "I’m not sure whether it would affect them as much as it would a big shop. You know where they've got a lot of overhead and turnover."
Local coffee shop owners say they try not to pass the extra expense on to the customer, but at some point they have no choice.
But these coffee lovers say paying more for their brew won't scare them away.
Deike says, "oh I’ll always drink coffee. Oh absolutely. I'll cut other things before I cut out my coffee."
The price of Arabica coffee is now $2.97 a pound.
Coffee traders expect prices to soar past $3.40 a pound and force roasters to raise retail prices again.
Harga Kopi Terus Menggila, Cuaca Jadi Kambing Hitam hen,Ade Irawan - detikFinance
Minggu, 13/03/2011 15:02 WIB
Harga Kopi Terus Menggila, Cuaca Jadi Kambing Hitam
Jakarta - Harga kopi terus mengalami kenaikan dan menyentuh harga US$ 2 per kg untuk jenis kopi robusta dan lebih dari US$ 4 untuk jenis arabika. Harga ini pun terus berubah setiap harinya tergantung produksinya yang terpengaruh cuaca ekstrem.
Ha ini disampaikan Sekjen Asosiasi Eksportir Kopi Indonesia Rahim Kartabrata kepada detikfinance Minggu (13/3/2011).
"Faktor cuaca membuat produksi turun dan supply kurang sehingga harga naik," katanya.
Menurutnya kopi-kopi berjenis arabika dari Indonesia lebih mahal 30% dari kopi sejenis asal New York. "Kalau harga arabika dari New York itu sekitar US$ 4 per kg nya, berarti kopi dari Indonesia lebih mahal 30% tiap kg nya," ujarnya.
Rahim menambahkan, kopi jenis arabika asal Indonesia memiliki kualitas yang lebih bagus dari arabika, New York.
"Arabika Indonesia itu termasuk arabika spesialty, kalau di New York itu arabika generik," ungkapnya.
Ia juga mengatakan perubahan iklim yang tidak menentu membuat pasar kopi tidak bisa memprediksi sampai kapan harga kopi terus meningkat. Perubahan iklim telah membuat menurunnya produksi kopi dan menyebabkan harga kopi terus beranjak naik.
"Kalau ada yang punya bola kristal, pasti mereka sudah ambil posisi," katanya.
Menurutnya daerah penghasil kopi di Sumatra seperti Bengkulu, Sumatra Selatan, dan Lampung terlalu banyak turun hujan, sehingga produksinya
berkurang. Namun, hal ini bukan hanya terjadi di Indonesia, negara lain seperti Kolombia sebagai negara penghasil kopi terkena imbas juga.
"Kalau di Sumatra kebanyakan hujan, di Kolombia malah kepanasan," tegasnya.
Menurutnya, kopi itu tidak boleh terkena cuaca yang terlalu panas atau dingin. "kepanasan atau banyak keujanan ya sama saja mengurangin produksi," tambahnya.
Harga Kopi Terus Menggila, Cuaca Jadi Kambing Hitam
Jakarta - Harga kopi terus mengalami kenaikan dan menyentuh harga US$ 2 per kg untuk jenis kopi robusta dan lebih dari US$ 4 untuk jenis arabika. Harga ini pun terus berubah setiap harinya tergantung produksinya yang terpengaruh cuaca ekstrem.
Ha ini disampaikan Sekjen Asosiasi Eksportir Kopi Indonesia Rahim Kartabrata kepada detikfinance Minggu (13/3/2011).
"Faktor cuaca membuat produksi turun dan supply kurang sehingga harga naik," katanya.
Menurutnya kopi-kopi berjenis arabika dari Indonesia lebih mahal 30% dari kopi sejenis asal New York. "Kalau harga arabika dari New York itu sekitar US$ 4 per kg nya, berarti kopi dari Indonesia lebih mahal 30% tiap kg nya," ujarnya.
Rahim menambahkan, kopi jenis arabika asal Indonesia memiliki kualitas yang lebih bagus dari arabika, New York.
"Arabika Indonesia itu termasuk arabika spesialty, kalau di New York itu arabika generik," ungkapnya.
Ia juga mengatakan perubahan iklim yang tidak menentu membuat pasar kopi tidak bisa memprediksi sampai kapan harga kopi terus meningkat. Perubahan iklim telah membuat menurunnya produksi kopi dan menyebabkan harga kopi terus beranjak naik.
"Kalau ada yang punya bola kristal, pasti mereka sudah ambil posisi," katanya.
Menurutnya daerah penghasil kopi di Sumatra seperti Bengkulu, Sumatra Selatan, dan Lampung terlalu banyak turun hujan, sehingga produksinya
berkurang. Namun, hal ini bukan hanya terjadi di Indonesia, negara lain seperti Kolombia sebagai negara penghasil kopi terkena imbas juga.
"Kalau di Sumatra kebanyakan hujan, di Kolombia malah kepanasan," tegasnya.
Menurutnya, kopi itu tidak boleh terkena cuaca yang terlalu panas atau dingin. "kepanasan atau banyak keujanan ya sama saja mengurangin produksi," tambahnya.
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