Dollar roils Europe, Canada coffee roasters still reeling from drought

Tue Mar 31, 2015 3:05pm EDT
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By Luc Cohen

NEW YORK, March 31 (Reuters) - Last year, it was drought. This year, the U.S. dollar's relentless rise has forced some retailers in Europe and Canada to hike coffee prices, caving in to severe cost pressure even as concerns grow about declining demand.

German discount supermarket chain Aldi South "had no option" but to raise prices in its home market after costs went up, due in part to the euro's drop against the dollar, the company said.

At Aldi South stores, customers are paying 3.49 euros ($4) for a 500 gram bag of extra, ground coffee, up 6 percent following a hike last month, it said in a statement.

That is the highest in almost three years, said Frankfurt-based retail analyst Matthias Queck.

Germany's second-largest coffee roaster, Tchibo, raised prices on some of its 500 gram units by 20-30 euro cents on March 2, spokesman Arnd Liedtke said. He did not give sales prices, but described the dollar's move as "exceptional".

Liedtke said it was too early to tell what impact the price hike would have on sales, but that the company was monitoring it closely.

"Whenever you change prices, the effect on volume can be extreme either way," he said.

The greenback's rise against the Canadian dollar was a factor behind Tim Hortons' decision to raise prices at its more than 4,500 stores in Canada and the United States late last year, a source familiar with the situation said.   Continued...