Starting Tuesday, Starbucks will be increasing their prices yet again. The increase ranges from five to twenty cents for most drinks. It has only been a year since the Seattle based company’s last price increase.
This does not look so great for Starbucks though, as other coffee sellers are beginning to cut prices. Last week, the J.M. Smucker Co. said it would cut prices because of the decline in prices for unroasted coffee beans that is said to be beginning soon. However, Starbucks pointed out that coffee costs are only a part of its expenses as they face rent, labor, marketing and equipment costs as well.
While food prices will not be increased, Starbucks is still actively trying to get customers to purchase more of their food items like sandwiches to increase sales.
Although many a people are angry about this increase in price, it must be realized that food price inflation is making it difficult for companies not to increase their prices. With products like milk and coffee having their own prices rise by as much as 27% in the last year, it is understandable that some companies who use a lot of these products must increase prices.
That being said, Starbucks is aware that they are industry leaders and that slight price increases will most likely not cause people to stop consuming their products. Despite their price increase in 2014, Starbucks as a brand was still able to increase its value by 44%, making it worth about $26 billion now. So while Starbucks tests customer loyalty with this price increase, I am certain that they will discover that customers are quite loyal to them.