Tim Hortons exec hints coffee price hike may be needed

Executives at Tim Hortons Inc. are hinting that a price hike for customers ould be on the way in 2015, as they respond to the soaring value of next year's crop of coffee beans.

Price of coffee beans has doubled, so chain says it will 'need to look at' pricing in stores

The price of raw coffee beans has almost doubled in the past year, which could lead to price increases at the retail level. (Chris Young/Canadian Press)

Are you ready to pay more for your morning cup of coffee?

Executives at Tim Hortons Inc. are hinting that a price hike could be on the way in 2015, as they respond to the soaring value of next year's crop of beans.

Chief financial officer Cynthia Devine told analysts that bean prices are a factor that Tim Hortons will "need to look at" with its franchisees.

While she stopped short of saying higher coffee prices at the restaurant chain are a certainty, she said Tim Hortons would need to determine "what actions may be necessary" at its stores.

Prices for coffee beans have nearly doubled this year, partly on concerns that lack of rain in Brazil could dry up next year's crop. In October, the price of Arabica beans jumped to a two-and-a-half year high.

Large coffee chains like Tim Hortons order coffee beans through futures contracts and lock in the prices for years at a time with their suppliers, which gives them flexibility and protects them from market fluctuations.

Already, some of the company's competitors have boosted how much they charge for a cup, including coffee chain Starbucks and U.S. manufacturer J.M. Smucker, which makes the Folgers brand.

On Wednesday, the company announced its profit declined slightly related to costs associated with its recent deal with Burger King.


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