Starbucks is Increasing Prices After Drought in Brazil Causes Coffee to be More Expensive

Starbucks Price Rise

Starbucks is raising prices after drought in Brazil pushed up the cost of coffee.

Starbucks announced rising prices on some of its drinks by 5 cents to 20 cents starting next week, and customers can also expect to pay $1 more for the packaged coffee sold in supermarkets.

The company stated prices for Grande and Venti brewed coffees will see a 10 cents and 15 cents rise in most U.S. markets. However, certain drinks such as tall brewed coffees and Frappuccinos won’t see higher prices in most places, the company said.

Starbucks says the drink price increase is 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.

Spokesman Zack Hutson said in an interview, Starbucks will raise prices starting June 24 in its company-operated cafes and on July 21 in stores.

“We consider many different factors when we make pricing decisions including competitive dynamics and including changes to our overall cost structure,” Hutson said. Store costs include commodities, rent, labor and equipment, while packaging and distribution costs affect retail, he said.

Starbucks isn’t the only one facing higher costs for Arabica beans after the drought has hurt yields in Brazil, the world’s top producer. Dunkin’ Brands Group Inc., owner of the Dunkin’ Donuts and Baskin-Robbins chains, stated earlier this month they are recommending a price increase to its franchisees due to higher coffee costs.

Brazil is the world’s largest coffee producer, responsible for about a third of the global supply. But a three-month drought has left farmers trying to recover supplies, and coffee bean prices rising.  Brazil’s Agriculture Minister Neri Geller said that farmers should expect a better harvest next year, following the worst dry spell in 50 years.

Starbucks Raising Prices

The cost of coffee is going up. Drought in Brazil and disease in Central America are pushing prices higher.

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