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Coffee prices remain steady locally as national bean prices continue to fall

BY QUENTIN MISIAG | APRIL 12, 2013 5:00 AM

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Good news, coffee connoisseurs: The price for that daily cup of coffee may soon cost less, because bean prices have continued to decrease since January.

Frequent gourmet coffee shop customers in Iowa City and across the United States could see the caffeinated beverage price drop as popular trends, including fair trade and organic options, grab a bigger piece of the market.

According to the International Coffee Organization, the global bean price per pound in March fell 13 cents from February to $131.38. A year ago, that price was more than $30 higher, at $167.77. The third highest point since 1998 stood at $224.33 in March 2011.

Despite the recent drop, local coffee prices have remained steady this year, and local cafes don’t forecast a rise in the near future.

Sam Caster, a barista at the Times Club Cafe in Prairie Lights, 15 S. Dubuque St., said although club’s roaster, Stumptown Coffee of Portland, Ore., has increased per pound bean pricing, a rise in price per cup isn’t anticipated over the coming year.

He said the nature of the climate change in Ethiopia, Guatemala, and Indonesia — the the source of the bulk of the club’s coffee — can dictate the drink prices here.

“There’s a huge level of variance, but the main thing is just going to be quality,” he said. “If you make a really good cup of coffee, people are going to pay more for it.”

Prices spiked in 2011 because of increased international demand from developing nations, limited farmland, and unsuitable weather patterns in countries where the majority of coffee beans are produced. A number of cafes, including the Java House, and T-Spoons, responded to the increase by raising their prices slightly. The Java House, for example, raised all of its house blends by a quarter in March 2011. Fair Grounds chose not to hike prices, instead deciding to switch to cheaper cups to compensate for increasing costs.

Steve Pernetti, the owner of Fair Grounds, 345 S. Dubuque St., said despite seeing one of the lowest price points in the area, the organic vendor hasn’t raised prices in over two years. The previous owner increased the price of a standard black coffee from $1.90 to $2.09 at the end of 2010.

“We probably could raise prices, but it’s like who’s going to blink first and raise prices in Iowa City,” he said. “Everyone else follows what the big boys at the Java House and Starbucks do.”

Pernetti said prices are ultimately dictated by the costs that occur at their three affiliated micro-roasters in Minneapolis, Seattle, and Wisconsin.

“It’s not a simple equation, but a lot of roasters like coming to Iowa City because they feel like we have a reasonably good coffee palate.”

At Wake Up Iowa City, 112 S. Linn St., owner Jarrett Mitchell says the story is quite different for the entirely fair-trade and organic coffee shop. Shortly after opening, Mitchell had only increased costs of coffee drinks to match surrounding competitors.

However, Mitchell said, sequestration and European Union finances have caused a slowdown in coffee arrivals.

University of Iowa freshman and self-described avid coffee drinker Leslie Chareunsab said it would take the price for a standard latte to climb to $5 before she would rethink her daily cup of Joe.

“Although it’s slightly more expensive here than Des Moines, it doesn’t make that much of a difference,” she said. “Coffee is a social thing and it helps me stay awake.”

Patrick Barron, a UI adjunct lecturer of economics, said the frequent fluctuation in the wholesale price of coffee is normal, occurring in part because of growing conditions in South America and a thriving American coffee-shop culture. Although much of the cost per cup comes from the shop’s ambience, equipment, and service, he said he foresees the current culture to continue.

“In Iowa City, you’re not going to get away with a less aromatic cup of coffee … it’s definitely a more sophisticated area, and I’m surprised that they haven’t raised prices here,” he said. “As long as that social and cultural aspect is around, I think coffee shops will do well.”


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