Economics Commentary
Starbucks sees premium coffee supply meeting demand
Mon Sep 18, 2006 12:28 PM ET
NEW YORK (Reuters) - The chairman of specialty coffee chain Starbucks Corp. said coffee farmers should be able to meet growing demand for premium coffee, despite some market concerns about tight supply.
Starbucks, with more than 12,000 stores in some 37 countries, has no "concern that we can see or anticipate in terms of lack of supply and lack of opportunity for us to continue to get the kind of coffee that we need," Howard Schultz told Reuters in an interview on Monday.
Schultz said coffee producing countries like Rwanda and Indonesia were stepping up their output of high-quality Arabica beans the company uses for its specialty coffee products.
He declined to comment how much coffee the Seattle-based company purchases each year.
Market sources reckon Starbucks buys between 2 million and 3 million 60-kg bags of coffee annually.
Starbucks this year expects to exceed its 50 percent target of coffee purchases from farmers applying the company's Coffee and Farmer Equity (C.A.F.E) Practices, a set of what the company says are socially and economically responsible buying guidelines.
The specialty coffee industry, which has boomed in the United States and Asia over the past 15 years thanks in part to Starbucks, accounts for less than 10 percent of world supply.
The specialty of the coffee comes from its taste, or acidity, and lack of defects. The best beans are usually grown in high elevations or in volcanic soils rich in minerals.
The International Coffee Organization (ICO) expects global 2006/07 coffee supply to reach 122 million bags, up from 106.9 million bags in the previous season. It sees world consumption rising to 117 million bags in 2006 from 115 million bags in 2005.
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