U.S. coffee prices have fallen 37% since hitting 10-year high last May, data shows
April 16, 2012
– Coffee companies have continued reap the benefits of falling coffee prices. The low prices have allowed companies to provide better products to consumers while still maintaining, and in some cases increasing, their profit margins. Coffee prices have fallen 37 percent since hitting a 10-year high on May 3, 2011, according to the Dow Jones-UBS Coffee Index. The Paragon Report examines investing opportunities in the Beverages Industry and provides equity research on Peet's Coffee & Tea, Inc. (NASDAQ: PEET - News) and Coffee Holding Co., Inc. (NASDAQ: JVA - News).
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"The decline came in response to expectations of a surplus in Brazilian coffee beans, following a run-up amid a significant supply-demand gap in early 2011," David Krein, senior director of Product Development & Analytics at Dow Jones Indexes, recently wrote. "The recent drop in prices has benefited coffee roasters, who some experts suggest may purchase better-quality coffees as a result."
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Peet's Coffee & Tea, Inc. announced its fourth quarter and full-year results for the period ended January 1, 2012. Retail net revenue increased 3% to $56.5 million for the 13 weeks ended January 1, 2012, from $54.7 million for the corresponding period last year. The increase was driven by a 6% rise in sales of beverages and pastries. The Company opened two stores in the quarter, ending the year with 196 stores versus 192 stores at the end of fiscal 2010.
Coffee Holding Co., Inc. recently announced its operating results for the three months ended January 31, 2012. The company reported a sales growth of 120% which increased to net sales of $56,601,684 for the three months ended January 31, 2012 and $25,641,093 for the three months ended January 31, 2011. The company reported a net income of $1,578,345, or $0.25 per share basic and $0.24 per share diluted, for the three months ended January 31, 2012 compared to net income of $1,041,072, or $0.19 per share (basic and diluted), for the three months ended January 31, 2011.
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