Coffee is currently $1.71-per-pound, which is down 30% from the $2.48-per-pound price of a year ago, but that has not stopped the folks at Starbucks from raising their price-per-pound – from $9.99 to a whopping $14.99!
You can start to get an idea of the profit Starbucks is making off each pound of coffee they sell by checking the falling world price of the popular bean.
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MarketWatch:
The price of Arabica coffee dropped to around $1.71 per pound in October, down 3% from the previous month and down about 30% from the $2.48-per-pound price of a year ago, according to the latest edition of the World Bank’s “ Commodity Markets Review Report .”
Why? Supply is plentiful in Colombia and Central America, where much of the coffee that ends up in the American market is grown. In fact, Brazilian coffee growers, who provide a third of the world’s coffee, are predicted to harvest a record 6.6 billion pounds in 2012, according to a recent report in The Wall Street Journal .
So will Starbucks consider dropping prices? A spokesman declined to comment. Of course, there are other reasons why Starbucks remains popular. Customers go there for the jazz music and free Wi-Fi, which encourages them to lounge with their iPads for hours — often nursing cold cups of coffee. Regular customers can build up loyalty points for free drinks and, last September, Starbucks sold 1.5 million $10 e-gift cards at 50% off through the daily deal site LivingSocial.com, according to company spokesman Jim Olson. “We also have other overhead like fuel and dairy products,” he says. But analysts say customers may not always be prepared to pay nearly $5 for a 16-ounce “grande” or medium Starbucks Frappuccino. “They do have to be careful,” Russo says. “Consumers are starting to watch what they spend.”
