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Nespresso, the single-serve unit of Switzerland's Nestle SA (NSRGY, NESN.VX), raised prices this week in the U.S. and in Europe for its high-end coffee pods due to the rising cost of green coffee, the company's chief executive said Thursday.
The company lifted prices by 3.6% in the United States to 57 cents per pod, and by 6% in Europe to 35 euro cents, effective June 1, said Nespresso's chief executive, Richard Girardot.
"We have to manage that," Girardot said, referring to the higher cost of unroasted beans.
He said the company uses 95% arabica beans, a variety that is more difficult to grow and subsequently more expensive compared with robusta beans.
Arabica coffee futures on InterContinentalExchange have nearly doubled over the past year after bad weather clipped output in major producers, such as Colombia, and speculative buying and increased demand drove up prices.
But Girardot said the company has no plans to switch its blend to include more of the cheaper robusta beans.
"We are an arabica company," he said. "We use robusta like salt and pepper when you cook."
Last month, Starbucks Corp. (SBUX) and J.M. Smucker Co. (SJM) announced price increases for some of their bagged coffees. Earlier this year, U.S. coffee roasters and retailers Kraft Foods Inc. (KFT) and Massimo Zanetti USA raised prices under pressure from climbing green-coffee costs.
-By Leslie Josephs, Dow Jones Newswires; 212-416-4055; firstname.lastname@example.org