By May Angel and Marcelo Teixeira
LONDON/NEW YORK (Reuters) -Coffee roasters 3 Coracoes and Melitta are raising prices for their products in Brazil, the world’s second-largest coffee consumer behind the U.S., according to documents sent to clients and seen by Reuters.
A joint venture between Brazilian company Sao Miguel and Israeli group Strauss, 3 Coracoes said it was increasing prices for roast and ground coffee by 10% and for instant coffee by 7% as of September 1.
Melitta South America, also a major player in Brazil, said it was increasing prices by 15% as of September 1.
The two companies, which cited rising raw bean prices, volatility and climate issues as reason for the price hike, did not immediately answer requests for comment.Â
Global prices for raw arabica beans have risen more than 20% this year after soaring 70% last year, as top grower Brazil experienced another poor crop due to adverse weather.Â
More recently, the U.S. move to slap 50% tariffs on imports from Brazil boosted prices further, as roasters in the world’s top coffee drinker raided existing stockpiles.
Raw bean prices account for about 40% of the wholesale cost of a bag of roast and ground coffee, on average, meaning roasters all over the world will be facing pressure to raise prices.
Having previously hiked roast and ground prices by 11% in January and 10% in December, 3 Coracoes raised them by 14.3% on March 1. Melitta increased prices by 25% in December.
There was a brief price decrease in Brazil’s coffee retail in August, industry group ABIC had said, as futures prices fell from record highs earlier in the year. ABIC, however, also projected the trend would be reversed as the tariffs kicked in. That reversal is happening now.
Roasters are starting to buckle under pressure from rising costs as cash-strapped consumers are pushing back against price hikes by engaging in bargain-hunting or trading down to supermarket brands.
(Reporting by May Angel; Editing by Paul Simao)
