Starbucks set to increase prices

Following in the footsteps of J.M Smucker, Starbucks has announced that they will be raising the prices of their coffee.

The move is in response to the spiralling costs of raw coffee that is the by-product of adverse weather conditions strangling supply in some of the major coffee growing nations. Up until this point, Starbucks had held firm and had even suspended purchases for a while as they waited for the market to ease up a little.

Start tomorrow, a number of outlets will implement an increase of between five and twenty cents, depending on the location of the store.

Starbucks has claimed that the price escalation will only raise the average bill by less than a percent.

“For both our packaged coffee and retail business, there are many factors that contribute to our pricing decisions, including competitive dynamics and our overall cost structure,” a company spokesperson said.

In addition to the rise of drink prices, the cost of packaged coffee sold in external retail stores will also increase, though customers won’t feel it impact their wallet until the end of July.

It is expected that customers buying as 12-ounce bag will now have to fork out $9.99 instead of $8.99.

However, Starbucks were keen to stress that they dropped the prices of their packaged coffee by ten percent last year: “With this increase, we are effectively restoring prices to their pre April 2013 level.”

A couple of weeks previously J.M Smucker became the first major United States based roaster to inflate their pricing structure when they announced a 9% rise. Kraft Food Groups followed shortly after, responding by increasing prices by 10%.

“Coffee has more price elasticity than other commodity categories,” Ms. List-Stoll, the Chief Financial Officer of Kraft, noted at the time.

Both moves were in response to forecasters predicting that a further drought in Brazil, which produces half of the world’s Arabica, would suffocate supplies.