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March 21, 2005
Who profits from rising coffee prices? Mon., March 21, 2005, 9:28 AM
This chart in British Pounds for coffee contracts illustrates the extreme 65 percent upmove since the end of October 2004.
Sure the coffee farmer in Latin America is seeing some benefit to this commodity price spike, but who really is profiting when I bought that jar of instant Nescafe (or was it Maxwell House?) coffee at the supermarket on Saturday?
Well, Nestlé S.A. (USOTC: NSRGY [ADR]) and Kraft Foods (NYSE: KFT) seem to be the ones that gain, since they take about 55 percent of the price I paid. The retailer took about 25 pct, leaving just 10 pct for the coffee grower and another 10 pct for the local "coyotes" who control the import-trade trade in these "emerging" economies.
But the extra profit Kraft is making on a jar of Maxwell House doesn't seem to be helping the stock. It topped out in mid-December like a lot of others in the Consumer Staples sector, including the food retailers.
Posted by Posted by Bill Cara on March 21, 2005 09:25:20 AM | Category: 30 Consumer Staples , Commodities