Starbucks considering price hikes
September 23, 2010
by Eric Schroeder
SEATTLE — Although it said it has no plans for across-the-board price hikes on beverages or packaged coffee, Starbucks Corp. on Sept. 22 said it intends to implement targeted price adjustments on certain beverages in certain markets. The announcement comes in the wake of escalating prices for green Arabica coffee, currently close to a 13-year high, as well as significant volatility in the price of other key raw ingredients, including dairy, sugar and cocoa.
As part of its plan, Starbucks said it expects to maintain — and in some cases lower — the price of certain espresso beverages as well as its $1.50 tall brewed coffee. Pricing for labor-intensive and larger-size beverages, meanwhile, is expected to increase, the company noted.
“Over the last six months a highly speculative green coffee market and dramatically increased commodity costs have completely altered the economic and financial picture of many players in the coffee industry,” said Howard Schultz, chairman, president and chief executive officer of Starbucks. “And while many, if not most, coffee roasters and retailers began raising prices months ago, we have thus far chosen to absorb the price increases ourselves and not pass them on to our customers. But the extreme nature of the cost increases has made it untenable for us to continue to do so and we have been forced to take the steps we announced today.”
In addition to the pricing of beverages in its retail shops, Starbucks said it would not rule out the possibility of raising the price of packaged coffee in other channels, including grocery, in the coming months.
To learn more about how high prices are affecting the coffee market, please visit High Prices Jolt Coffee Market.