Starbucks to Raise Prices on Drinks, Bagged Coffee Tuesday - KTVN Channel 2 - Reno Tahoe Sparks News, Weather, Video

Starbucks to Raise Prices on Drinks, Bagged Coffee Tuesday

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Starbucks is hiking prices on some of its drinks by 5 to 20 cents starting Tuesday, and customers can also soon expect to pay $1 more for the packaged coffee it sells in supermarkets.

A year ago the Seattle-based chain also raised prices on some of the drinks sold in its cafes. The latest hikes don't seem to be driven purely by the surging bean costs that have pressured other coffee sellers to raise prices, however. Starbucks has said it already locked in its coffee contracts for the rest of this fiscal year and much of the next.

Crops have been decimated by a drought in Brazil, and disease in Central America. "They're paying more for coffee, and they want to pass along that higher expense to the consumer, so that it doesn't adversely affect their bottom line," says Adam Sarhan.

Starbucks said only about 20% of its customers will be affected, and that on average, coffee drinkers will be paying less than 1% more at the register. "A Starbucks customer tends to be an affluent customer. So are they going to stop buying Starbucks coffee if they go there every day because prices went up by a dime or 15 cents? The answer is most likely no."

The company also said the price of a 12 ounce bag of its packaged coffee beans sold in stores will go up $1, matching recent price increases announced by Folgers and Maxwell House. And consumers aren't just feeling the pinch over coffee. The government said that in May, prices for food eaten at home jumped the highest in nearly three years. Fruits and vegetables got more expensive for the fourth consecutive month. The cost of milk is up 7 months in a row, while meat and poultry prices increased 7.7% over the past year. "These companies have no choice but to raise prices. As long as consumers continue to buy their products, for the most part, the companies will continue to pass along those price hikes."

(The Associated Press also contributed to this report.)


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