Kaffe Magnum Opus Blog » Business Ideas

Maxwell House Raises Prices 22%

bobjohnson1945 — Fri, 18 Mar 2011 19:46:38 +0000

Here is the Reuters Article. It is long butkmo well worth reading. I urge you to raise your prices for whole bean and the cup.

13:37 17Mar11 -UPDATE 1-Kraft hikes some Maxwell coffee prices by 22 pct

* Kraft ups ground coffee prices by 70 cts/lb equivalent

* Tassimo, Maxwell House International not affected

(Adds details, background)

By Marcy Nicholson

NEW ORLEANS, March 17 (Reuters) – Kraft Foods Inc

said Thursday it raised its U.S. list prices for Maxwell House

and Yuban ground coffees by a whopping 22 percent and its

instant coffee by around 10 percent.

The price hikes, which were effective on Wednesday, marked

the company’s fourth coffee price hike in a year and came after

arabica coffee futures soared to a 34-year high this month.

“(The) increases are due to sustained increases in green

coffee,” Kraft spokeswoman Bridget MacConnell told Reuters on

the sidelines of the annual National Coffee Association meeting

in New Orleans.

The company raised the price for Maxwell House and Yuban

ground coffees by 70 cents per pound equivalent, and for

instant coffees by 6.25 cents per ounce.

Excluded from the increase were single-serve Tassimo items

and the Maxwell House International line of specialty soluble

beverages, MacConnell said.

Arabica coffee futures more than doubled in price by early

March in a rally that began in June 2010 on fund buying and

tight supplies, with the benchmark May contract reaching

a 34-year high for the second position at $2.9665 per lb.

Roasters have been forced to raise their list prices over

the past nine months as a result of the sustained rally.

Kraft most recently raised its prices in December. J.M.

Smucker Co , known as the trendsetter for coffee price

changes, most recently increased its coffee prices last month,

by 10 percent.

Robusta futures trading on Liffe in London have

joined in the rally, soaring to a three-year high at $2,661 per

tonne on Thursday.

(Editing by Walter Bagley)

((marcy.nicholson@thomsonreuters.com; +1 646 223 6043; Reuters

Messaging: marcy.nicholson.reuters.com@reuters.net))

13:37 17Mar11 -FACTBOX-Recent history of coffee price moves

March 17 (Reuters) – Kraft Foods Inc , one of the

top coffee roasters in the United States, said Thursday it

raised prices for many of its roast coffees by 22 percent,

marking its fourth and biggest price hike in a year.

The price hike went into effect March 16. [ID:nN17442469]

The company’s reason was the soaring cost of green coffee

as arabica futures rallied to a 34-year high earlier

this month and robusta futures vaulted to a three-year

peak on Thursday.

Roasters have widely been forced to raise their prices

sporadically since June 2010 when the rally began, initially

spurred by fund buying and then sustained by tight supplies of

washed beans.

The popular beverage is still considered an affordable

luxury in the developed world. Below is some of the recent

history of its price moves in the futures market and on store

shelves.

* May 1997: New York spot arabica coffee futures

surge to $3.18 per lb.

* 1997: The then Folgers Coffee Co raised prices for

Folgers coffee by a staggering 29 percent due to soaring green

bean prices. This was followed by another price hike of nearly

10 percent a couple months later.

* May 18, 2010: J.M. Smucker Co raised list prices

for majority of its Folgers, Dunkin’ Donuts, Millstone and

Folgers Gourmet Selections coffees by about 4 percent.

* May 21: Kraft Foods raises list price of some

Maxwell House and Yuban roast and ground coffee by about 4

percent.

* June 11: Arabica coffee futures trading on ICE

begin to rally on heavy fund buying following about five months

of sideways dealings between $1.2655 and $1.3985 per lb.

* Aug. 3: Smucker’s raises prices of Folgers and other well

known brands by average of 9 percent in biggest widespread rise

in years.

Coffee Snobbery Can Can Your Growth

bobjohnson1945 — Sat, 23 Oct 2010 17:05:04 +0000

This is a great article on Coffee Consumption by a Passionate Person.

http://dailydemitasse.com/2010/10/coffee-snob-conflict/

It is from the Daily Demittase.

My Reply:

This is a great story. And true. And the way I have approached coffee for the twenty years I’ve been in the trade. You must be flexible.

I’ve also urged all our coffee house and cafe customers to be above all else flexible and innovative. Innovation is the antithesis of tradition.

Let us all remember that coffee houses were undertaken in the country of tea drinkers. London.

And the Original London coffee houses were dens of financial wizardry well before the evaporation of values and traditions in Wall Street.

Which is a round about way to say that some traditions, like honesty, are fundamental and a foundation for an industry.

Starbucks was an innovation. They got lost along the way but they are big, smart and seem to be more flexible now.

I will always remember my first iced latte’ during the SCAA Seattle Show in ’90 or ’91. I’d been ‘off’ caffeine for a few years, but this was so good, I could not ignore its value, and with great luck and good timing, I got started in the coffee business.

And then the first Hazelnut Coffee, so bright and smooth. That morning I was taking my first baby steps into the business at a farmers market. Amazingly, my coffee supplier at the time came out at 3 AM to help me get set up. He made the first pot in my commercial launch. And it was perfect.

Notice: latte and hazelnut, not exactly the double espresso’s I drink today, with one packet of splendid, or, more to my liking, a half shot of vanilla or amaretto syrup. Down the hatch.

So no snobbery at my end, just good business. A coffee retailer must provide what the customer demands.
Bob Johnson

bobsceoblog.wordpress.com

Would You Walk The Grand Canyon Rather Than Give Up Your Morning Coffee?

bobjohnson1945 — Fri, 22 Oct 2010 19:23:32 +0000

This came across my twitter account. Its a survey done for Green Mountain Coffee. It is great reading. Here is the link:

http://www.tradingmarkets.com/news/stock-alert/gmcr_survey-shows-1-in-10-americans-would-rather-traverse-the-grand-canyon-than-give-up-their-morning-cup-1247490.html

Come to www.kmocoffee.com

Coffee companies must attract younger drinkers, research group says

Robert Kraeuter — Tue, 19 Oct 2010 21:36:22 +0000

With coffee drinking patterns relatively unchanged in recent years, a recent study by Mintel Intl., a leading market research and analysis firm finds that coffee companies must center their focus on younger customers.

The study shows that “Two thirds of Americans have a cup of coffee every day. However, only 27 percent of the coveted 18-24-year-old demographic drink coffee on a regular basis.”

Attracting younger adults into coffeehouses and cafes is very important to successful long term growth. Discussions about what could attract more of this target market could start with a coffeehouse’s employees, which in many instances are part of that demographic.

Creating a casual atmosphere with music, available wi-fi, offering Fair Trade Organic coffees as well as a food menu of items that would appeal to this group is a great starting point. Becoming a destination for social get-togethers - live music, open mic nights, poetry readings and movie nights could prove to be fun as well as profitable.

To read further about this article

The CEO or Owner or Leader or PGA Tour Professional must know the details

bobjohnson1945 — Mon, 16 Aug 2010 00:10:30 +0000

Is this a Sand Trap, or Bunker? Dustin Johnson thought, as virtually all the fans on the course and at home thought, it was a path, not a bunker. But it is a bunker designed by Pete Dye, the course designer. Dustin Johnson put his club on the ground behind the ball; in golf language he grounded the club. A no no in a bunker. So after finishing the hole, and tying the PGA Championship, on national television, he was penalized two strokes and dropped out of the playoff with two other players. A real shame. But…

Golf pros are their own CEO and the CEO is responsible for knowing the details when he or she is making a decision. Routine situations, even ones disguised by trampling, are not routine when the CEO is involved. So there is a lesson for all of us to learn. Know the rules, know the details. In this case the ball is resting on sand, and might have raised a question in Johnson’s mind, but it did not because the bunker was trampled.

At first I thought it was a path, but the rules chairman explained that “local rules” were clearly spelled out in handouts and signs, and the local rules made it clear that every sand area on the course was a bunker.

Tough. Very tough. But… Johnson missed it.

So we must all stay current, read, research, learn, go to school, read the NY Times online (my bias), read books, stay technically current, know your accounting, know your pricing, know your costs, and know your customers. There are no small decisions. Know the details and pursue them relentlessly.

Dustin Johnson is a stand-up man who I think will be back to win other major golf championships. Lets hope this bad decision doesn’t cripple him. Another trait of the CEO must be resilience. We make mistakes, we have to move on, correct the work, and get on with running a profitable business.