Starbucks to raise prices of packaged coffee, some drinks

Barista Sandy Roberts pours samples of Starbucks coffee during the company's annual shareholders meeting in Seattle, Washington in this file photo taken March 19, 2014.
DAVID RYDER | REUTERS
Barista Sandy Roberts pours samples of Starbucks coffee during the company's annual shareholders meeting in Seattle, Washington in this file photo taken March 19, 2014.
Posted June 22, 2014, at 4:06 p.m.

Time to stock up on Starbucks packaged coffee.

The Seattle coffee giant says it’s raising the suggested retail prices for packaged coffee, as well as for some beverages at its company-operated U.S. stores.

The list price for Starbucks Corp.’s roast and ground coffee at the grocery store will go up by 8 percent on average, or about $1 per bag, on July 21, a company spokesman said. The move returns prices to what they were in April 2013, before the company had made a 10 percent cut. Now the 12-ounce bag will have a suggested retail price of $9.99 and the 20-ounce bag will list at $13.99.

The move follows similar increases by competitors such as J.M. Smucker Co., which sells Dunkin’ Donuts and Folgers coffee. Smucker this month said higher green-coffee costs led to a 9 percent increase in its many coffee products. Kraft Foods also raised its packaged-coffee prices.

Since the beginning of the year, coffee prices have been emerging from a slump, thanks to fears that a drought in Brazil, the commodity’s largest producer, may reduce this year’s harvest.

Starbucks spokesman Zack Hutson said higher coffee prices are a factor, but one among many, including “competitive dynamics” in the marketplace. That’s corporate-speak for watching its rivals and pricing itself accordingly.

Starbucks is somewhat shielded from green-coffee price volatility because it generally buys its coffee far in advance. The company has all the coffee it needs for its 2014 fiscal year and has 40 percent of its 2015 requirements under contract, Hutson said.

But if the drought curtails Brazil’s bean exports, Starbucks will likely face higher prices next time it hits the market for green coffee. The harvest season for Brazil’s smooth-tasting arabica beans, the variety prized by Starbucks and other specialty retailers, usually begins around June.

Starbucks owns about 11.5 percent of the U.S. market for packaged coffee, which includes the sale of single-serve coffee pods such as K-cups, according to Wells Fargo analysts. Starbucks says that the K-cups, its VIA instant-coffee products and its Seattle’s Best Coffee line will not see price changes.

Some coffee beverages sold in Starbucks’ sprawling U.S. coffeehouse empire will also see a spike in price, effective Tuesday.

The changes will vary by market and will only happen at stores directly run by the company. Overall, the average amount consumers spend in a Starbucks run will increase less than 1 percent, and the most popular drinks, such as tall brewed coffee or grande lattes, will not change in most markets, said Hutson.

But grande and venti-sized brewed coffee will increase 10 to 15 cents in most areas, and tall and venti latte and mocha drinks will get a 15- to 20-cent jolt. Most increases will be between 5 and 20 cents, Starbucks says, adding that 80 percent of customers will not be affected by the changes.

The last change in prices at the retail level — a 1 percent average increase — took place last June.

Distributed by MCT Information Services

 

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