Nestle Chairman Sees Cocoa, Coffee Supplies Remaining Strong

Date : 05/19/2011 @ 3:06PM
Source : Dow Jones News
Stock : J.M. Smucker Company (The) New (SJM)
Quote : 126.58  -0.88 (-0.69%) @ 4:01PM

Nestle Chairman Sees Cocoa, Coffee Supplies Remaining Strong

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Nestle SA (NSRGY, NESN.VX) Chairman Peter Brabeck-Letmathe said Friday he expects there will be a sufficient supply of cocoa and coffee from the major producing areas around the world for the next few years.

Switzerland-based Nestle is among the largest cocoa and coffee-buying companies in the world.

Recent political unrest in the Ivory Coast, the largest cocoa-producing country in the world caused a problem for cocoa users, Brabeck-Letmathe told Dow Jones Newswires, but stressed that was a "short-term" issue.

Commodity trade houses Cargill Inc. and Archer Daniels Midland Co. (ADM) said this week that cocoa operations have resumed in the country.

"Overall, I don't see any [reason why] there shouldn't be a sufficient supply of cocoa and coffee over the next few years," he said.

But coffee is becoming a more expensive commodity for companies like Nestle.

Futures of arabica coffee, the world's most widely consumed variety, have doubled over the past 12 months on IntercontinentalExchange, as growing demand and consecutive bad harvests limited the availability of beans.

This week, Nestle's Nespresso coffee unit confirmed it is raising prices for its single serve coffee capsules to deal with spiraling raw material costs by two euro cents, or 6%, per capsule.

Other leading manufacturers Kraft Foods Inc. (KFT), Starbucks Corp. (SBUX) and J.M. Smucker Co. (SJM) have also lifted prices this year because of higher raw material costs.

-By Bill Tomson, Dow Jones Newswires; 202-646-0088; bill.tomson@dowjones.com




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