Starbucks Expects to Raise Prices Tuesday: Patch Poll

Certain drinks will cost customers 5 to 20 cents more.

Starbucks expects to raise prices on some of its coffee drinks Tuesday. (Patch file photo)
Starbucks expects to raise prices on some of its coffee drinks Tuesday. (Patch file photo)
By Morgan Searles

Prices will increase Tuesday on certain Starbucks coffee drinks and products, The Wall Street Journalreported Friday.

Changes in the cost of raw coffee have pushed a number of coffee businesses to similarly raise prices,Yahoo Finance reported.

J.M. Smucker announced earlier this month it would raise the prices of its Folgers and Dunkin’ Donut brands in supermarkets by about 9 percent, Yahoo Finance reported. Maxwell House and Yuban, owned by Kraft Food Group, jumped about 10 percent this month as well.

Tell us:

  • Will the increase in prices affect your coffee-buying habits at Starbucks? Take our poll and tell us what you think in the comments.

Raw coffee is threatened by drought in Brazil and harmful fungus, Yahoo Finance reported, but that doesn’t fully explain why Starbucks will cost more.

After coffee had exceeded $2 a pound, Starbucks CEO Howard Schultz told Fox Business in a March interview that Starbucks has “more than one year’s worth of protection on physical inventory and contracts.”

“We do not have any intention at this time to raise prices,” Schultz told Fox Business in that interview.

WSJ reported Starbucks has locked down its coffee supply for the 2014 fiscal year and part of the supply for the 2015 fiscal year.

So why are Starbucks’ prices going up?

The Associated Press cited an email from spokesperson Jim Olson, who said “competitive dynamics” and “cost structure” influenced the price change.

Prices will increase by 5 to 20 cents, WSJ reported, and Starbucks representatives said a normal coffee bill in the cafes will only go up by about 1 percent. Starbucks’ packaged coffee in grocery stores will rise in price by about $1 each bag.

The price of packaged coffee in Starbucks stores will not change, WSJ said, and the price will also stay the same for certain Starbucks drinks, such as grande-sized lattes, tall brewed coffees and Frappuccinos.

Ken Hershenson June 23, 2014 at 10:57 AM
The people who complain about a 5 to 20 cent raise in a cup of coffee are the very same people who do not understand the downstream effects of typical cutbacks and budget cuts. They vote for cutbacks and budget cuts in their cities and then whine about roads not being plowed in the winter or having to wait longer for customer service which is slow because of cutbacks in the number of employees due directly to budget cuts. Because of a TINY raise in cost, employees of Starbucks are getting free college and part time employees are getting health benefits. This concept improves our society as a whole. It's called free market. There is a reaction to every action. Some people just don’t get this. They want something for nothing and are unwilling to give a little to get a lot.
Dale Behler June 23, 2014 at 09:23 PM
No problem for me. Starbucks priced me out of their specialty coffee market long ago. There is a point where price increases instead of responsible cost management will cause the consumer to chose to stop buying their product and go to McDonalds for their coffee. That is also a free market and one reason Starbucks have been forced to close so many of their stores. It is a very simple concept that also applies to reasonable government budget controls as well. It isn't a bottomless pit of money. If taxes are too high, consumers don't have the extra money to buy expensive Starbuck's specialty coffee and other goods and services. That's not wanting something for nothing, that's economic reality.
Ken Hershenson June 23, 2014 at 10:16 PM
You're right about the free market Dale. However, the reason Starbucks raised prices IS because of responsible cost management. Even Wall Street pundits predicted back in April that Starbucks would have to raise their prices. http://247wallst.com/commodities-metals/2014/04/27/starbucks-will-have-to-raise-coffee-prices/ All companies must manage their money when the raw product prices they use, are raised. That's business. Coffee prices rose 90% in the first 5 months of this year. Milk and sugar prices also increased. There are lots of things to consider when balancing decisions like this: shareholders, customers and employees to name a few. Keep in mind that Folgers and other coffee companies are also raising their prices for the very same reason. The free market ebbs and flows in regards to cases like this. Some people, like you, choose not to pay the higher prices. Some people who might really like Starbucks might not have a problem with an extra dime. Yay for the free market system. In regards to taxes being the cause of someone not buying Starbucks, I beg to differ. Too many corporations are reaping record-breaking profits and not hiring more people or giving raises to their existing employees. That's a bigger problem with income in my opinion and a bigger cause of Americans cutting back on their spending.
Dale Behler June 24, 2014 at 10:02 AM
Good points, Ken. But families and students have a limited about of money to spend. So they have to go for the basics rather than luxury items when taxes and high cost of living take more and more of their income. Corporations are restricted by the same rules, as Starbucks is finding out. As costs go up they either raise prices or cut costs (labor costs). Government seems to think all they need to do is raise taxes, and spending cuts are the last resort. Until recently, cutting labor costs and benefits were not in the mix. I blame a spendthrift government and union greed for most of our economic problems, including the export of jobs overseas. The USA is constantly running neck and neck with Japan for the highest corporate tax rates in the world. That's the reason several U.S. corporations are moving their company headquarters to lower tax rate countries. Back to Starbucks, the increasing cost of coffee beans has cut into their profits so they raise prices. Specialty coffee isn't like gasoline which consumers require to get to work or for personal travel. When the price of Starbucks product get to a certain level, consumers can easily chose to not buy it because it will be viewed as a luxury item. Only those who either have no money restrictions or have a strong Starbucks coffee preference will continue to buy it. I personally like their coffee, but feel the cost/benefit relationship of their product is turning against them.


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