March 29, 2020
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Buzzkill: Why coffee prices are on the rise in Maine

PORTLAND, Maine — Matt Bolinder of Matt’s Wood Roasted Organic Coffee monitors coffee commodity prices on Nasdaq from his iPhone in his Congress Street cafe, the Speckled Ax.

Escalating costs for raw arabica coffee this year have put Maine coffee roasters such as Bolinder on guard, leading many around the state to raise prices to maintain their margins.

Bolinder is aware that he is serving a gourmet premium product in his cafe and that every penny counts.

“You paid $2.75 for that cup of coffee, now if all of a sudden it’s $3, you might think twice,” he said.

Across the coffee industry, the same trend is playing out. Last week, J.M. Smuckers announced a 9 percent increase for Dunkin’ Donuts and Folgers Coffee sold at supermarkets.

The cause is threefold: A coffee leaf fungus called roya is killing crops in Central America, on top of a lengthy drought in Brazil. In addition, increasing transportation costs are making delivery of green coffee beans more costly.

After nine months of studying coffee and dairy prices, as well as projections of minimum wage and fuel costs, Coffee By Design will raise its prices within a month.

In a few weeks, customers will see a 15-cent increase in all coffee drinks across the board in its Portland and Freeport cafes. That means a 12-ounce cup will go from $1.65 to $1.80. And a 20-ounce sip soon will cost $2.40, plus taxes.

“No one likes to pay more, but there are lots of factors,” said Mary Allen Lindemann, co-owner of Coffee by Design. “In order to get the quality that we want, there is a price you have to pay.”

The company’s “loaded cost,” which is “everything that goes into getting it on the shelf,” has gone up, she said. Cups, lids and “anything with fuel has gone up 10 percent,” she added.

Whole beans sold by the pound will not budge at the retail level for now, but “as new coffee and pricing comes in, they will be priced accordingly,” said Lindemann, who has not raised prices in 2½ years.

Contrary to the past, when the company agonized over price hikes, Lindemann now thinks customers are expecting it. Signs at Coffee By Design cafes will go up soon to inform customers.

“Our goal is to continue to offer an outstanding product,” said Lindemann.

In a coffee report published this week by the International Coffee Organization, prices that increased steadily for five months actually dipped in May.

But for many coffee roasters, the relief comes too late.

Even on quiet Deer Isle, roasters are subject to fluctuations in the marketplace. Melissa Raftery, co-owner of 44 North Coffee, has seen her coffee prices go up this month.

On average this year she is paying $2.85 to $4.14 per pound for green coffee beans. And that keeps rising.

“On our last purchase we did not have any coffee under $3 a pound,” said Raftery, who roasts beans in a former high school on the island.

As “spot buyers” who purchase beans “one pallet at a time,” they are prepared for shifts.

“We’ve built it into our margins,” she said.

Last year, 44 North Coffee raised its price per cup 50 cents — a 12-ounce pour-over is $2.50 and 16-ounce iced coffee is $3.50.

This year, however, given its location and customer base, which is a mix of locals and summer people, it is not planning to elevate retail prices.

“We feel very reluctant to raise our prices; we would price some people out. We are in a rural area and people are not used to paying Portland prices,” said Raftery. “We do not want our regulars to no longer be able to buy our coffee.”

But she added that consumers in general “need to get used to seeing higher prices, when you think about all the hands that touch coffee.”

Coffee drinker David Orbeton of South Portland gets it. He buys coffee three days a week at Scratch Baking Co. in Willard Square and did not flinch when his caffeine kick increased by 25 cents a cup in mid-May — the bakery’s first increase in more than five years.

“It doesn’t bother me at all. I read about a coffee blight in Central America,” said the knife sharpener, who participates in farmers markets with coffee roasters and was well aware of pressures on the industry.

“It’s one of those things you don’t have control over,” he said.

Orbeton stops into Scratch for coffee when he is walking his dog and has no plans of changing his routine despite the price bump.

“It’s not us, the consumer, getting screwed. I support them 100 percent,” Orbeton said.

In Rockland, Rock City Coffee Roasters recently restructured prices for its wholesale clients because of shifting markets.

Certain bean varieties from Central America and Indonesia have increased up to 30 cents per pound, according to Kevin Malmstrom, Rock City’s head roaster. Yet there has not been a corresponding retail price change at the Rockland cafe, he said.

For this midcoast roaster, Central American beans were the hardest hit.

“Everything in that general region is more expensive,” said Malmstrom.

Despite the increase, business has not tapered off.

“We explained it to them [wholesale customers]. Everyone has been really understanding about it. No complaints,” said Malmstrom. “We are really busy in the summer, we seem to be doing OK.”

Back in Portland, Bolinder is keeping up his iPhone vigil.

Though prices have stabilized this month, he said, roasters “won’t really know where it will be, going forward, until Brazil’s harvest comes in these next couple of months.”

Bolinder gave his wholesale customers a warning earlier this spring that an increase may come.

“I’m giving people a heads up, letting them know that the market is up and if prices continue to go up and stay up don’t be surprised,” he said. “If it stays at this level for six months to a year, I’ll have to increase my margins on my wholesale costs. It’s not something that I like to do.”

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