Starbucks Coffee Packages Getting Pricey
The coffee company announced this week that it would raise prices by 17% on all packaged coffees sold in its U.S. stores as of July 12. (Canadian store prices will go up, too, but by just 6%.) This, on the heels of a 12% price increase in March, will have prices up almost a third since early 2011. Does this portend a possible, subsequent increase in brewed coffee drinks, which went up last September (the "complicated" ones, that is)?
Of course, Starbucks isn't the only company to raise its coffee prices this year -- every company from Folgers to Portland/New York indie darling Stumptown has been dialing up the price of beans from 10% to 15% at a time. Folgers has upped its prices three times in the past year alone, with the total increases adding up to about 25%.With the price increase that takes effect in July, Starbucks' house blend coffee will be going up from about $8.95 to $12.50 per pound and the higher priced blends, such as the Anniversary blend will go from a current $11.95 to $14.95 per pound (the coffee is sold in 12-ounce bags, so the price per package will top out a little above $11.00).
This may seem like a stunning change, but if you look at the changes in the commodity prices over the same period, you'll be thanking your lucky stars these stiff price increases are all we've seen. Futures for robusta beans, the less expensive and lower-quality beans grown at low altitudes and present in the more blue-collar brands of coffee, such as Folgers, Maxwell House and the like, are up 95% since June 2010. Arabica beans, the ones used in Starbucks and other higher-quality coffees, have more than doubled in the same period.
Even with the price of the raw ingredient in coffee doubling, it's still only about $3.09 per pound, even for the pricier sort of beans; most of the cost input is actually in the shipping, roasting, processing and distribution.
So while you shouldn't mourn the fate of the poor coffee makers too extremely, it's worth mentioning that coffee, a traditionally very high-margin beverage, is becoming less so. It's already caused a few coffee shops in my city to shut down (one, around the corner from my house, was a big loss -- it's becoming a pizza shop instead).
In addition to coffee beans, prices have on a huge range of other tropical products in the last months. Coconut oil, cashew, sugar and cocoa prices are all reaching stratospheric levels, thanks to lower production due to global climate change and distribution disruption due to the Japanese earthquake and tsunami and other natural disasters, as well as upheaval in the Ivory Coast, which produces sugar and cocoa.
So while the majority of attention is being put on gas prices, many of the foods we turn to for stimulation, sweet treats and comfort could be what really ruins our mood this summer. Eating locally, not globally, may become a necessity rather than a buzzword. Chicory, anyone?