Starbucks to raise prices on some drinks, packaged coffee

Reuters

By Lisa Baertlein and Marcy Nicholson

(Reuters) - Starbucks Corp on Friday said it will raise prices on some drinks offered by its U.S. shops and also boost list prices on its own brand of packaged coffee sold in supermarkets and other retail outlets.

The action comes just weeks after J.M. Smucker Co raised list prices of its well-known Folgers and Dunkin' Donuts brands, for the first time since 2011 because of soaring green coffee costs.

Dunkin' Brand Group Inc also has said it expects "modest increases in coffee prices" at its Dunkin' Donuts restaurants.

Starbucks' more than 7,100 company-owned U.S. stores will raise the price of some drinks by 5 to 20 cents on June 24. For example, the cost of grande (16 oz) and venti (20 oz) brewed coffee will increase 10 to 15 cents in most markets.

The coffee chain characterized the drink price increases as limited, saying they would affect fewer than 20 percent of customers.

The price increase for some drinks, including grande brewed coffees, are the first in almost 4 years.

Prices of Starbucks' most popular drinks, the grande latte, tall (12 oz) brewed coffee and Frappuccino, will not go up in most stores. There also will be no price increases on food at this time, the company said.

Separately, the Seattle-based chain is boosting the price of Starbucks-brand whole bean and ground coffee sold in supermarkets and other stores by an average of 8 percent on July 21.

That means that shoppers likely will see prices go up about $1, to $9.99 for a 12-oz bag and $13.99 for a 20-oz bag.

Starbucks had lowered prices on packaged coffee by about 10 percent in April 2013.

Prices will not change on K-cups, Starbucks Via instant coffee and Seattle's Best Coffee. Further, the change does not apply to bags of coffee sold in Starbucks' stores.

Arabica coffee prices on ICE Futures U.S. soared nearly 90 percent between January and April on concern about crop damage in top grower Brazil, where an unprecedented drought in its growing region took place while the beans were developing on the trees.

The drought surprised the entire coffee industry and caused speculators to pour into the futures market, lifting the benchmark price to $2.19 per lb by late April, the highest in more than two years. The futures price has since fallen more than 20 percent, to a four-month low at $1.6655 per lb on Thursday, as Brazil's harvest got under way.

Starbucks repeatedly has stated that it bought plenty of coffee when prices were low in 2013, and had secured coffee for the current fiscal year and 40 percent for next fiscal year.

(Corrects venti drink size in fourth paragraph to 20 ounces, not 24 ounces)

(Reporting by Lisa Baertlein in Los Angeles; Editing by Steve Orlofsky)

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