Nestle brand faces 'difficulties' with coffee supply

23rd March 2011, Comments 0 comments

Food giant Nestle's coffee subsidiary Nespresso is facing supply difficulties due to poor weather conditions affecting some crops, the brand's chief executive said on Wednesday.

"Our number one problem at the moment is finding arabica of a quality that are in line with our standards," Richard Girardot told AFP.

"We have suffered from unfavourable climatic conditions in Brazil and in Colombia. It's a real handicap," he explained.

Colombia, the world's top exporter of the arabica variant of coffee beans, has again been hit by bad weather conditions after several poor harvests.

Coffee prices reached their highest level in 34 years in New York on March 10, with prices for arabica for delivery in May climbing to 296.65 cents.

Girardot believes that speculative financial trading similar to that which has blighted other commodities has also fuelled high coffee prices.

"There is speculation by financial bodies which have started to play on the beginnings of a shortage," he said, while underlining that there was "no global coffee shortage but difficulties with some high grades."

Girardot said the shortage could lead Nespresso to adjust its prices but no decision has been taken yet on a price rise, he added.

Turnover for the coffee and proprietary machine brand reached 3.2 billion Swiss francs last year.

Girardot said he was aiming for continued growth at the same pace, in double digits this year. That could lead to sales of more than 3.5 billion Swiss francs.

© 2011 AFP

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