High Commodity Prices Force Starbucks to Increase Its Prices

Coffee drinkers at Starbucks will soon be waking up to more than just caffeine. Starbucks will now greet its customers with higher coffee prices to compensate for 13-year highs in the price of green arabica coffee and what the company calls “significant volatility” in the prices of milk, sugar and cocoa.

Starbucks announced its plans in a news release titled “Starbucks Responds to Surging Green Coffee Prices” (September 22, 2010):

“Company to Implement Targeted Price Adjustments; Will Hold the Price of Tall Brewed Coffee at $1.50 in Most U.S. Markets; Retail Packaged Coffee Price Increases Possible”

Starbucks blamed “speculators” for the high prices, and lamented that it is one of the last in the industry to pass on these soaring costs to customers.

The Seattle Times highlights other past price increases at Starbucks:

“Last year, Starbucks raised prices on some drinks, including Frappuccinos, when it also dropped prices on other beverages. In 2007, it raised prices across the board an average 9 cents because of high dairy prices. That followed a nickel increase a year earlier.”

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