Despite declining coffee prices, Starbucks ($SBUX) hiking some prices by 1%
Posted: January 4, 2012 Filed under: Agriculture, food | Tags: coffee, iPath Dow Jones - UBS Cotton Total Return Sub-Index ETN, JO, SBUX, Starbucks Leave a commentAlthough agricultural prices have generally decreaed for several months, coffee included, Starbucks (SBUX) announced today that it will hike the prices of some beverages by about 1% in the Northeast and the Sunbelt regions of the U.S. SBUX cites “the prices reflect competition in certain markets and higher costs for coffee, fuel and other commodities.”
Note that Starbucks stock was actually down today while the major indices experienced strong rallies.
For more detail see “Starbucks to raise prices in certain regions”
Starbucks had a great 2011. Did today's news end the coffee run for now?
Source: FreeStockCharts.com
Coffee prices have been sliding for months and ended 2011 down from 2010
J.M. Smucker increases prices an average 11% for its coffees
Posted: May 24, 2011 Filed under: commodities, food | Tags: coffee, J.M. Smucker, SJM Leave a commentJ.M. Smucker (SJM) announced today that “sustained increases in green coffee costs” have forced the company to hike prices on many of its coffee brands:
“The J. M. Smucker Company…announced today that it increased the list price for the majority of its coffee products sold in the United States, primarily consisting of items sold under the Folgers®, Dunkin’ Donuts®, Millstone®, and Folgers® Gourmet Selections® brand names. Prices will increase an average of 11 percent on impacted items.”
This price hike motivated AP to run a story summarizing the state of the coffee industry and market and the experiences with soaring costs – see “Coffee drinkers keep chugging, as prices rise“. AP notes that SJM has increased coffee prices four times in the past year. SJM’s stock performance suggests this pricing power has contributed to a strong bottom line.
J.M. Smucker has had a strong year - leaving the recession far behind on its way to fresh all-time highs
Source: Stockcharts.com
Peet’s Coffee promises not to “overreact” to the rising cost of coffee
Posted: May 3, 2011 Filed under: commodities, earnings reports | Tags: coffee, PEET, Peet's Coffee Leave a commentPeet’s Cofee (PEET) reported earnings results this evening. The company reaffirmed revenue targets for the year but lowered earnings guidance because of the rising cost of coffee (emphasis mine):
“Reaffirms full-year total net revenue growth in the 8% to 10% range. Lowers full-year diluted earnings per share guidance by $0.10 to the $1.43 to $1.50 range, driven entirely by the significant rise in coffee costs during the last three months“
Interestingly enough, PEET implied that the run-up in coffee prices is overdone. This news should provide some reassurance and relief to coffee fans, especially since it seems PEET is resisting the urge to ramp up its own prices to keep up with the rising input costs (emphasis mine):
“While we expect to offset most of the year-over-year coffee cost increase we’re experiencing, we will continue to act in the long-term best interests of our business and not overreact to the recent run-up in world coffee prices.”
PEET has more than doubled in two years
High Commodity Prices Force Starbucks to Increase Its Prices
Posted: September 23, 2010 Filed under: commodities, food | Tags: coffee, SBUX, Starbucks Leave a commentCoffee 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.”
Starbucks increases prices of some drinks
Posted: January 16, 2010 Filed under: food | Tags: coffee, Starbucks 2 CommentsCNN/Money: “Starbucks is raising prices on certain drinks by as much as 35 cents in large U.S. markets and in Canada as part of what the coffee chain calls its “normal course of business… The move could be a risky one for Starbucks, which has suffered declining sales for two years as consumers switched to lower priced brands like McDonald’s and Dunkin Donuts.”
Inflation Watch 