The company announced that while it has no plans to raise prices of beverages or packaged coffee sold in Starbucks US or international stores, it does plan to implement targeted price adjustments on certain beverages in certain markets.
The company further announced that it will continue to closely monitor green coffee prices, and that it couldn’t rule out the possibility of raising the price of packaged coffee in other channels, including grocery, in coming months.
“Over the last six months, a highly speculative green coffee market and dramatically increased commodity costs have completely altered the economic and financial picture of many players in the coffee industry,” said Howard Schultz, Starbucks chairman, president and CEO. “And while many, if not most, coffee roasters and retailers began raising prices months ago, we’ve thus far chosen to absorb the price increases ourselves and not pass them on to our customers. But the extreme nature of the cost increases has made it untenable for us to continue to do so and we’ve been forced to take the steps we announced today.
As part of the plan, Starbucks expects to maintain or lower the price of some of its most popular beverages, including:
The company also said that it would continue to carefully monitor and evaluate green coffee prices and the possibility of raising prices in consumer packaged goods channels in coming months.
“As we navigate this challenging cost environment, we will continue to offer value options for our customers every day through our My Starbucks Rewards loyalty programme and other promotions,” said Schultz.
The company also reaffirmed the outlook it provided in its third-quarter earnings call on 21 July 2010, targeting a range of $1.36-1.41 earnings per share in fiscal 2011, which at that time reflected the then-current rise in commodity costs as well as the company’s efforts to absorb a portion of those cost increases.
The targeted price adjustments announced today should mitigate the impact from more recent rising costs.
Source: Starbucks
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