Your Starbucks Coffee Just Got More Expensive, Relatively Speaking
How much would you pay for a cup of Starbucks (SBUX) coffee? Starbucks hopes it's a lot. And if it's not too much trouble, they'd also really rather you not do any comparison shopping before placing your order.
Already one of the pricier cups of joe in this country, Starbucks hiked prices on its brewed beverages at cafes in the Midwest, Pacific Northwest, California and Hawaii last November. Then it upped prices in the Sunbelt and Northeastern regions in January.
Meanwhile, everybody but Starbucks, it seems, is doing the exact opposite.
Take J.M. Smucker (SJM), for example. The food conglomerate is more famous for its jams, but Smucker also owns Folgers and Millstone, and controls the rights to retail distribution of Dunkin' Brands (DNKN) coffee. Last week, Smucker announced that "sustained declines" in the cost of unroasted coffee beans have permitted it to cut the cost of its coffee -- and that's just what it's doing, slashing packaged coffee prices by about 6%.
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Fast-forward three days, and on Friday, Maxwell House owner Kraft Foods (KFT) followed suit, and even did Smucker one better. While Kraft's Maxwell House and Yuban brands will see prices fall 6%, the company's premium Gevalia brand will drop by a full 10%. According to the companies, this is the second round of price cuts since August 2011 for Smucker and Kraft.
And at Starbucks? Costs just keep going up.
So what's the deal, Starbucks? According to Kraft, the big coffee retailers are all seeing "sustained decreases in the cost of green coffee." The logical conclusion, then, is that either Starbucks is a really bad haggler when it comes to negotiating the cost of its beans, or else... Starbucks is sticking it to the consumer. How's that for a bitter aftertaste?
Motley Fool contributor Rich Smith holds no position in any company mentioned. The Motley Fool owns shares of Starbucks.Motley Fool newsletter services have recommended buying shares of Starbucks and writing covered calls on Starbucks.
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