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Starbucks Breaks Its Promise, Raises Its Prices
By
Ari Lipsitz
Published Jun 21, 2014
Modified Jun 21, 2014
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By
Ari Lipsitz
Published Jun 21, 2014
Modified Jun 21, 2014
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Responding to a surge in coffee prices, Starbucks is now raising the price of its drinks and packaged coffee. For now, it only applies to Grande and Venti drinks — 10 to 15 cents for a coffee, and 15 to 20 cents for a latte or mocha. And in supermarkets, bagged coffee will increase by $1. The price increase depends on your market, but you’re in New York, so brace for the pricier side, just like literally every other damn thing sold here.
Why is this cruelty happening? Blame commodities and caffeine speculation. A drought in Brazil shot coffee prices through the roof — from January to April, coffee futures rose almost 80%. They’ve since declined to 53%, but the damage has been done. Since then, J.M. Smuckers and Kraft upped their prices by about 10%. Dunkin’ Donuts is debating following suit.
Starbucks CEO Howard Schultz claimed last March that Starbucks prices wouldn’t go the same route as its competitors. "We can manage this,” Schultz said, “we have over a year's worth of protection.” Schultz was wrong, and now Starbucks has to raise their prices like everyone else. One analyst observes that price increases are generally permanent. “Once those prices rise, they are very unlikely to come down again.”
Starbucks' food won’t change in price, nor, mercifully, will iced coffee. The inaccurately-named tall drinks will also stay the same, since they are normal-sized anyway.
The CEO denies the price increases are related to the college tuition program announced this week, except that it's now clear why they announced the program this week!
It’s not that much — Starbucks lattes are already super expensive, while the bagged coffee increases 8%. And it's iced coffee weather anyway. Plus, Brazilian farmers are probably worse off, in case the guilt wasn't enough already. Starbucks' drinks go up this Tuesday, and expect bagged coffee to get more expensive starting July 24th. Is this the part where we talk about supporting your local coffee establishments? Yes, it is that part.
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coffee
globalization
starbucks
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Ari Lipsitz
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