Will Price Hikes Hurt Starbucks?
This is no surprise to java junkies, but coffee is big business. McDonald's (NYS: MCD) and Green Mountain Coffee Roasters (NAS: GMCR) each rake in more than $1 billion in annual revenue from coffee alone. Dunkin' Donuts (NAS: DNKN) can't reach those figures, but is known for its java and says it's No. 1 in iced-coffee sales.
Each of these companies no doubt lifted a mug in celebration of Starbucks' (NAS: SBUX) recent decision to raise its prices.
The king of caffeine does more than $10 billion in annual sales. In light of the still-struggling global economy and penny-pinching consumers, could Starbucks' price hikes really cause it to lose market share to competitors?
Starbucks isn't the only retailer able to prosper in difficult times. Check out "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail" to see two stocks to own in this struggling global economy.
At the time this article was published Fool analyst Rex Moore is currently caffeinated on Starbucks, but owns no companies mentioned here. The Motley Fool owns shares of Starbucks.Motley Fool newsletter serviceshave recommended buying shares of McDonald's, Green Mountain Coffee Roasters, and Starbucks; and creating a lurking gator position in Green Mountain Coffee Roasters. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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