Brace for Increases in the Prices of Starbucks (SBUX) Coffee

Love your coffee? Get ready to pay 8% more after July 21.
Starting this week, some beverages in Starbucks (SBUX) U.S.-operated stores will increase by between five cents and 20 cents, and customers can also soon expect to pay $1 more for the packaged coffee the company sells in supermarkets and other retail outlets.

Coffee prices have been increasing amid a drought in Brazil, the world’s largest coffee producer, prompting Starbucks prices for medium and large brewed coffees, which are known as Grande and Venti, respectively, to go up between 10 cents and 15 cents, or less than 1%, in most U.S. markets, the company said.

The list prices of Starbucks-branded ground and whole-bean coffees sold in grocery, drug and mass retail stores will also increase by an average of 8% on July 21. That translates to a hike of $1 per bag, so a 12-ounce bag of Starbucks branded coffee will rise to $9.99 from $8.99.

“We consider many different factors when we make pricing decisions including competitive dynamics and including changes to our overall cost structure,” Zack Hutson, a Starbucks spokesman told Bloomberg in an interview.

Keurig K-Cup, Via instant coffee and Seattle’s Best coffee prices won’t change.

J.M. Smucker Co. (SJM) this month became the first major U.S. roaster to lift coffee prices since May 2011 when it announced a 9% price hike on its Folgers and Dunkin’ Donuts packaged coffee.

Kraft Foods Group Inc. (KRFT) followed suit a few days later with a 10% price increase on its Maxwell House and Yuban brands. The price increase didn’t apply to Kraft’s instant coffees, single-serve pods, Maxwell House filter packs, Maxwell House International, Gevalia and Tassimo brands.

Shares of the world’s largest coffee-shop operator closed at $76.60 on Friday.

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