Trying to Apply a Coffee Brake

PRICES Trying to Apply a Coffee Brake

Coffee, tea or ...? That question was becoming rhetorical last week as Americans protested still another roadblock to their pursuit of happiness: the towering price of coffee. Manhattan's elegant 21 Club offers free tea to discourage diners from ordering coffee; eight blocks away, the Spindletop restaurant serves a free liqueur to coffee abstainers. Stop & Shop, a Northeastern food-store chain, posted signs in many of its 157 supermarkets urging customers to buy beverages other than coffee. In Atlanta, Store Owner Albert Solomon displayed posters saying DON'T BUY COFFEE. YOU CAN FORCE PRICES DOWN. Hartford, Conn., Mayor George Athanson, who is up for re-election this year, flagged down a city bus, jumped aboard and urged riders not to buy coffee.

So far, the protest has not reached full-fledged boycott proportions. But it may well do so if prices keep rising--and they probably will drastically shoot up in the next month or so. Last month New York City Consumer Affairs Commissioner Elinor Guggenheimer called for a nationwide one-week boycott and reduced her personal intake of coffee from 14 cups daily to none. She does not expect other coffee lovers to show the same fortitude--and is now back to two cups a day. But she does ask that they cut down: "Just pour half a cup."

She has received responses from consumer activists in California, Washington, Texas and Canada. One group is organizing a coffee boycott in the Virgin Islands. Martin Rosengarten, president of Daitch-Shopwell stores in the New York City area, rigorously took up Guggenheimer's cause. He ran ads urging less coffee buying and provided a 20-c- coupon good toward purchases of tea, cocoa or hot chocolate.

The reason for this outbreak of coffee nerves is that prices about doubled during the past 18 months, forcing many dining spots to abandon 20-c- or 25-c- cups of coffee; 35-c- is now not unusual. Maxwell House, the most popular U.S. brand, sold to supermarkets for $1.46 per pound in July 1975, but is now being sold by General Foods for $2.91. Procter & Gamble, roaster of Folger's, has raised its price to $3.08.

Consumers have been protected from the full brunt of the hikes by supermarket discounting and the use of coffee as a loss leader to lure shoppers. Store brands are also slightly less expensive. But as current supplies run out, the full price will begin showing up on supermarket shelves. That could happen in three to six weeks. Says a spokesman for Sloan's Supermarkets (34 stores) in New York City: "We do not intend to subsidize the coffee companies any further. We'd like to slow down coffee sales so coffee roasters will build inventories and we will get lower prices."

Crop Killed. Why have prices gone up so much? The cost of green coffee beans began immediately rising after the devastating frost of July 1975 that killed or harmed more than half the coffee trees in Brazil, which provides about a third of the world's supply. Although the 1975 crop had already been harvested, large parts of the potential crop for this year and last were severely damaged. Brazil's production plunged from 22.2 million bags of coffee in the 1975-76 crop year to 6.4 million bags last year, a 70% drop, while world demand remained about the same. It will take until 1979 to regrow the trees into yielders of the red berries that contain green coffee beans.

Still, the shortage is more potential than actual: by dipping into stockpiles, producers have maintained high exports, and the U.S. has found almost as much coffee to import as ever. To shore up their shaky economies, however, Brazil and other coffee-producing nations have increased export taxes on beans and reaped windfalls. Brazil's tax per pound has jumped from 22-c- to 75-c- Colombia, the second largest producer, now demands $1.47 per pound in taxes. Brooklyn Democratic Congressman Frederick W. Richmond, a member of the House Agriculture Committee, charges that "this is a crisis dreamed up by coffee-exporting nations to gouge the American consumer."

How effective a boycott could be is uncertain. The hardened coffee addict is no more likely to drink tea than an alcoholic is to develop a taste for orange soda. Coffee can thus withstand price rises that most other commodities cannot. Camillo Calazans, president of the Brazilian Coffee Institute, concedes that there is a limit to what people will pay for coffee. But he does not think a U.S. boycott will seriously cut into Brazil's coffee exports--or prices.

What buyer resistance there is has not yet appreciably bitten into sales or changed coffee-drinking habits. Even at $3 per pound, home-brewed coffee still costs only about 5-c- per cup. The most effective coffee-price brake may be applied by consumers in the countries where the beans are grown. Brazil is second only to the U.S. in drinking coffee and prices have more than doubled, to $1.63 per pound, in 18 months. That may seem cheap to an American--but the average annual per capita income in Brazil is only $800.

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