Pricier coffee beans Shops find ways to absorb higher cost for cup

Pricier coffee beans Shops find ways to absorb higher cost for cup

March 13th, 2010 by Tamara Best in Businesstopstory

Staff Photo by Matt Fields-Johnson/Chattanooga Times Free Press The Chattanooga Coffee Co., had its grand opening Thursday at its new store at 2627 Broad St., where they will sell, brew and roast their own coffee.

Staff Photo by Matt Fields-Johnson/Chattanooga Times Free Press...

Walking up to the Chattanooga Coffee Co. Roasting Studio, the aroma of coffee beans wafts through the door greeting customers.

The new location on Broad Street at West 26th Street, celebrating its grand opening this week, creates a new coffee experience by not only awakening the taste buds but giving customers a peek into the process.

"For the past two years we have really tried to concentrate on opening a second location and bring the roasting process into the public eye so people could see the process and understand how the coffee is roasted," said co-owner Evelyn Wheeler, adding that the shop is offering seminars this spring.

Ms. Wheeler and business partner Eileen Mason are celebrating the grand opening of the 1,900- square-foot location. The business' other location, Chattz, is on Market Street.

The opening of the second location comes at a time when industry insiders say coffee bean prices could rise because of an increase in demand coupled with a poor crop season in Brazil and Colombia, two of the world's leading coffee bean producers.

"The global supply-and-demand- balance for coffee is a deficit," said Mark Hansen, director of trading for CPM Group, as quoted by Bloomberg news in late February. "The deficit is using up existing stockpiles and should any crops disappoint, then prices should be expected significantly to reflect this."

However, local coffee shops said they have found ways to minimize the impact to customers and absorb the costs thus far.

"So far in eight years, we've only had to raise our prices three times," Ms. Wheeler said, estimating that increases were between a dime and quarter per cup. Any future increases will be in increments of a nickel, she added.

Some shops opt to change their logistical strategy. "One of the things we've done in anticipation is buy in bulk which helps cut the cost without sacrificing quality," said Michele Kephart, director of marketing and sales for the Rembrandt's Coffee House.

The coffee roaster has also reduced shipping and transportation costs by switching the warehouse location where its beans are stored, she said.


* 14 percent: approximate fall in crop production in Brazil in the 2009/10 season from 2008/09

* 132 million: estimate of bags of coffee consumed worldwide in 2009

* 13.5: percentage of world consumption by Brazil

* 54: percentage of Americans who consume coffee each day

* 29: percentage of Americans between 18-24 who have a cup of coffee daily

Source: International Coffee Organization and National Coffee Association of USA

Why coffee should be in your cup

* Studies show it's healthy and contains antioxidants that deter the onset of some diseases

* Helps you pause from the hectic rhythm of the day to take a break

* Great way to meet people and network

* It's an affordable pleasure in the recession

Source: The Chattanooga Coffee Co.

For other shops, it's all about diversifying their selection.

"From 6:30 to 9 a.m. it's all muffins and coffee but the afternoon lunch sales offset the higher cost of coffee," said Rick Shell, director of food and beverage for The Chattanoogan, home to Strouds, a sidewalk expresso cafe. "You might have a hit for a month or two but after that it goes back down."

Misty Heinsman of Joe Friday's Alaskan Coffee House on Houston Street also said the lunch menu makes up for money spent on coffee beans.

Still, the shops say they offer more than just a cup of coffee, and that's what keeps business flowing.

"We also sell an ambiance and vibe of the store," said Laura Hagemann, manager of Stone Cup Coffee House, of the social networking at coffee shops. "We're headed into our busy season and I've seen business increase dramatically."

Ms. Wheeler said the attention to detail by the baristas and hand-crafted drinks "creates a quality that can't be duplicated," making the perfect blend for success despite increased costs and various economic climates.

"When you are paying $5 for a cup of coffee you should have whatever you want," she said.