Starbucks to hike prices on 'labor intensive' drinks

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Starbucks drinks, long considered symbols of Americans' penchant to overspend, are about to get even pricier.

The coffee giant said late Wednesday that it will raise the price of "labor-intensive and larger-sized" beverages because of soaring prices of green arabica coffee beans.

Starbucks (SBUX, Fortune 500) said green coffee prices are close to a 13-year high, and costs for its other raw ingredients, including dairy, sugar and cocoa, have been volatile.

As CNNMoney reported earlier this month, coffee futures have climbed more than 40% since June.

"[This has] completely altered the economic and financial picture of many players in the coffee industry," Starbucks chief executive Howard Schultz said in a written statement. "We have 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."

The prices of many drinks, including "certain espresso beverages," will stay steady, and the company's flagship tall brewed coffee will remain at $1.50 "in most markets," Starbucks said.

But if your favorite caffeine bomb is a Venti Coffee Caramel Frappuccino, prepare to pay up: Starbucks is targeting its price hikes at drinks that are larger and more time consuming to make. It also warned that it may soon raise the price of its packaged coffee sold in grocery stores.

Starbucks doesn't plan to let the price shocks cut into its bottom line. The company backed its fiscal 2011 earnings outlook of $1.36 to $1.41 a share. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,982.59 22.02 0.13%
Nasdaq 4,444.91 -4.65 -0.10%
S&P 500 1,978.91 0.57 0.03%
Treasuries 2.49 0.02 0.89%
Data as of 8:36pm ET
Company Price Change % Change
Apple Inc 99.02 1.35 1.38%
Facebook Inc 74.92 -0.27 -0.36%
Bank of America Corp... 15.50 -0.09 -0.58%
Dollar Tree Inc 54.87 -0.08 -0.15%
Family Dollar Stores... 75.74 15.08 24.86%
Data as of 4:03pm ET

Sections

Herbalife shares tumble after the maker of nutritional supplements reports earnings that fall short of analysts' estimates. More

New annual report from U.S. government shows the long-term prognosis for Medicare has improved thanks to slower health spending, while the outlook for Social Security remains unchanged. More

Online dating site OkCupid found its users were more likely to have conversations when it told them they were more compatible than in reality. More

Actor-founded This Bar Saves Lives had Hollywood connections, but learned Start-Up 101 the hard way. More

Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.