Coffee Prices Hit 10-Year High - This Week in Food&Bev
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Welcome to your weekly food & beverage report, where we cover everything youโll need to know for the week ahead. This week, rising coffee prices have major implications, big food companies are trying to assuage restless employees, and unions and strikes make waves.ย
Coffee prices have hit a 10-year high, outpacing all other commodities over 2021
Caffeine fiends have probably noticed a spike in how much theyโre paying for their coffee habit, and for good reason. On Friday, the International Coffee Associationโs benchmark price was at $2.07/lb, an increase of 85% from last year (KTK23). Coffee prices have reached a 10-year high, and market projections expect prices to continue to climb all the way into 2023.ย
- Weather worriesโฆ From generational low temperatures, frost, and drought all impacting grow operations in Brazil, Ole Hanson, head of commodity strategy at Saxo Bank, has described the scenario as a perfect storm.ย
- International issuesโฆ Other countries that produce coffee are also experiencing problems. Ethiopia is on the brink of a civil war; Vietnam is seeing a rise in COVID-19 infections; international supply chains are in a state of disarray.ย
Months of relative underperformance from multinational coffee maverick Starbucks (SBUX) has left the company on pace to have their worst year since 2017. Todd Gordon, founder of Inside Edge Capital Management, wants to see more than an improving technical picture to buy into the coffee company.ย
- Fundamental issuesโฆ Gordon is โworried about the fundamentals,โ referencing Starbucksโ debt levels, exposure to the strengthening rental market, and the difference between its valuation and analystsโ growth expectations.ย
- Workers weigh inโฆ Starbucks is also facing potential unionization, which could cause another step back in the companyโs growth plans in the near future.ย
While youโre here, check out the latest episode of our new podcast The Food Biz, streaming across all podcast platforms. If you have any feedback or input, reach out to us at news@barchart.com. Weโd love to hear what you think!
Major food companies are having a reckoning with their employees, though some are facing bigger challenges than others
On strikeโฆ Last Friday, President Joe Biden went on the record to admonish Kellogg Co. (K) for its plan to permanently replace striking workers. The strike began on October 5, after 1,400 workers left their posts at the companyโs plants in Michigan, Pennsylvania, Nebraska, and Tennessee.
- No cigar... The opposing sides of the strike reached a tentative agreement, but union workers overwhelmingly voted against the new contract proposed by Kellogg.ย ย
- Rejection retaliation... After the rejection, Kellogg released a statement saying it had โno choice but to hire permanent replacement employees in positions vacated by striking workers.
Happy New Year!โฆ Last Monday, Tyson Foods (TSN) announced that the company will pay around $50m in year-end bonuses to its frontline and hourly meatpacking workers. The bonuses will be distributed to 86,000 eligible employees, based on tenure, ranging from $300-$700.ย
- Rebuilding retentionโฆ Meatpacking plants across the country have struggled to find enough workers during the COVID-19 pandemic. Around 59,000 cases of COVID-19 were reported at plants owned by Tyson, JBS USA (JBSAY), Cargill, and the National Beef Packing Company, and Smithfield Foods.
Other storiesโฆ
- Letโs taco bout itโฆJack in the Box will purchase Del Taco (TACO) in a $575m deal, expected to close early 2022.ย
- Alcohol avoidanceโฆ 2021 saw a boom in the non-alcoholic beverage industry, though most consumers arenโt giving up alcohol for good.ย
- Tis the seasonโฆ HelloFresh (HLFFF) has announced a $200k donation to Australiaโs leading food rescue organization OzHarvest to help feed people in need and reduce food waste this holiday season.ย
Thatโs all we have for you this week, do you have anything for us? Weโd love to hear from you with stories or recommendations for new sections to include! Drop us a line at news@barchart.com with any feedback or input.ย
Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.