BY STEVEN JACKSON

Business reporter

jacksons@jamaicaobserver.com

US-BASED Marley Coffee, owned in part by Chairman Rohan Marley, has said that the 40 per cent rise in Jamaica Blue Mountain (JBM) coffee prices could hurt sales.

The company’s comment comes amid an islandwide shortage of the luxury beans. Checks by the Jamaica Observer reveal that certain brands of JBM sell for upwards of US$88 a pound, compared with US$50 a year earlier. Marley Coffee usually retails at the higher end of the market.

“This tightening of supplies has caused JBM prices to increase by about 40 per cent,” the listed coffee company said in its just-released financials to US investors. “We are committed to ensuring our supply chain and providing our customers JBM. We are diligently working to secure more JBM as the market we created for it continues to expand. There still is a high demand for JBM in North America, but limited supply and rising costs may hurt sales.”

The company bought roughly $30 million (US$290,000) worth of Jamaica Blue Mountain coffee over nine months ending October or nearly two-thirds less than a year earlier.

“We are currently working to address the supply issues and we believe we will be in a far better position in Fiscal 2015 with respect to JBM availability,” stated the company in its financials, which included the caveat that its failure to source supplies would affect its ability to grow revenues.

The reduction occurred at a time when total sales at Marley Coffee hit US$2.5 million for its October quarter, or 13 per cent higher than a year earlier. Over nine months, sales hit US$6.7 million but the company reported a whopping net loss of US$7.8 million over that period, or three times worse than a year earlier. The main reason for the loss relates to executive compensation, which totalled US$1 million for the quarter.

The majority of Marley Coffee sales are outside of the distribution of JBM beans and products. The confluence of Hurricane Sandy, drought, abandoned farms and coffee leaf rust had reduced the crop production over the medium term. Local experts expect production to meet demand in three years.

The Jamaica Coffee Growers’ Association in February forecast the 2013/14 coffee crop to decline 40 per cent year-on-year. That would reduce Jamaica Blue Mountain and Jamaica High Mountain coffee production towards 130,000 boxes and 31,000 boxes respectively.

Earlier in its financial year, Marley Coffee set a target to earn US$10 million for its 2015 financial year. The company recorded a 234 per cent jump in sales to US$6 million in its financial year ending January 2014.

The company, which is based in Denver, USA, recently gained distribution in over 5,000 stores in North America, with plans to enter 10,000 stores.