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To: craig crawford who wrote (14)	5/31/2001 2:27:59 AM
From: craig crawford	Read Replies (1) \| Respond to of 1643

Saturday May 19, 12:47 pm Eastern Time Specialty Coffee Boosts Ailing U.S Consumption biz.yahoo.com LONDON (Reuters) - Top gourmet coffee retailer Starbucks Corp. (NasdaqNM:SBUX - news) said on Saturday the coffee shop revolution in the U.S. had halted a downtrend in coffee consumption and raised quality standards in the industry. ``It really has been a revolution and we have created an industry which didn't exist. It has arrested the (consumption) decline in North America,'' Starbucks President and Chief Executive Officer Orin Smith said. Speaking to delegates at a world coffee conference, Smith said Starbucks and other coffee houses had educated the American public to enjoy coffee of a higher standard. ``And they are willing to pay for it, which means we are able to pay more at origin,'' he said. Robert Nelson, president of the National Coffee Association of America (NCA) said gourmet coffee houses in the States numbered around 8,500 in 2001, against fewer than 500 five years ago.. He said 14 percent of American adults now drink gourmet coffee beverages on a daily basis, up nine percent on 2000. ``Specialty coffee...has reversed the downward trend in consumption experienced during the 1980's, when price consciousness succeeded in decreasing both quality and price,'' he said during a presentation to delegates. Major coffee roasters, manufacturers and retailers have recently come under fire in the media for continuing to make consumers pay high prices for a cup of coffee despite a massive drop in green coffee prices at origin. World coffee prices have slumped to historical lows over the past two years, throwing millions of farmers in developing countries into severe poverty, but retail prices in Western nations have not fallen accordingly. Chronic oversupply in world markets, linked with falling or stagnating demand and high stocks in consumer countries have conspired to throw the coffee world into its worst ever crisis. Smith said current price levels were a serious problem for Starbucks and the gourmet coffee sector in general. ``From our stand point, at our end of the quality spectrum, there is a serious threat that farmers will not produce quality coffee,'' he told delegates. ``The poverty that already exists (in producer countries) is already extreme. Where this is heading is unbelievable.'' Already farmers in several producing countries across Latin America and Africa have abandoned coffee culture for other more remunerative or less volatile cash crops. Smith said Starbucks had begun to implement longer-term price contracts with farmers in order to assure quality standards for its products at stable prices. He said the coffee giant had entered into some contracts paying prices of up to $1.40 a pound. This compares to international futures prices for arabica coffee, which last traded at just over 65 cents a pound on Friday. Smith gave no further details of the initiative, which also gives farmers more protection when selling their product for future delivery on the notoriously volatile coffee futures markets. But Chief Financial Officer Michael Casey said in January Starbucks was trying to extend its coffee position as far ahead as possible, adding it had signed contracts for delivery up to a year ahead.