High coffee prices are likely to continue, which may pressure companies such as Green Mountain Coffee Roasters Inc. and Sara Lee Corp., an analyst said Monday.
Akshay Jagdale of KeyBanc Capital Markets said in a client note that a Department of Agriculture report from Friday indicates that there is not enough supply to meet old crop coffee demand, referring to the crop from 2009 to 2010.
“All told, we expect coffee prices to remain elevated owing to a shortage of high-quality Arabica beans, a delay in harvesting, collection and distribution as a result of poor weather conditions and the low level of world coffee stocks,” the analyst wrote.
Jagdale said both Green Mountain and Sara Lee are highly exposed to coffee prices and will likely be hurt by increased coffee prices near term.
Downers Grove, Ill.-based Sara Lee has been shedding several of its units in order to concentrate on its more-profitable businesses including Hillshire Farms meat and Senseo coffee.