How Starbucks Addicts Are Bracing for the Coffee Price Hike

How Starbucks' price hike may affect coffee addicts.

BySusanna Kim
June 24, 2014, 4:55 AM

— -- Brian Gardner and his wife say they visit their local Starbucks in Chicago, Illinois, at least once a day, seven days a week. They already spend nearly $140 a week at the popular coffee chain, or as much as $6,700 a year.

Starbucks' announced price hike of 5 to 20 cents begins today in certain parts of the country, but the Gardners may have dodged the bullet this time around. Starbucks Grande and Venti brewed coffee will increase 10 to 15 cents in most markets, while Tall and Venti-sized Latte and Mocha drinks will rise 15 to 20 cents in some markets.

As Starbucks' ideal customer, Gardner says a price increase would do little to change his habit even if it affected his pocket.

"We are loyal fans," said Gardner, 40. "It will not change the amount of coffee we drink or amount of times we go."

Other Starbucks fans like Stella Yang, of the San Francisco area, said they may slightly change their habits for their favorite beverages.

When asked how she might respond creatively to the price hike, Yang said she may start picking up the pennies, dimes or quarters on the street she previously ignored.

"That's about as 'creative' as I get," she said.

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Gardner, who works at home as a partner of the software development company Copyblogger Media, said he typically orders a Grande cappuccino with extra milk while his wife orders a Grande soy latte, each about $4.50. These two drinks will not see a price increase in the Chicago area, a Starbucks spokesman said.

"We always have it first thing in the morning and, depending on where we are in the evening, we tend to drive through again in the day," he said.

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If the Gardners moved to a region that did implement a price hike on their drinks of choice, they could pay up to $268.80 more a year for their twice-daily Starbucks visits, but he says they are unfazed.

"Being Starbucks addicts, the only thing that would do for us is increase the price of our coffee. It wouldn't change the way we do anything or our budget, unlike others who may make sacrifices."

The Gardners have an at-home Verismo brewing system by Starbucks that they occasionally use if they can't go to a store.

"Starbucks is my vice and it’s a fairly inexpensive vice compared to what other vices one could have," he said.

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A spokesman for Starbucks said these adjustments will vary by market and will increase the average purchase by less than 1 percent. The company claims less than 20 percent of Starbucks customers will be affected by the change.

The last national beverage price adjustment in Starbucks stores was June 2013.

The company said in most stores there is no change to popular drinks like the Grande Latte, Tall Brewed Coffee and Frappuccino beverages.

Starbucks' price hike on packaged coffee sold in U.S. grocery stores takes effect July 21, an average increase of 8 percent on the suggested retail price. K-CUPs, VIA and Seattle’s Best Coffee are not impacted by this adjustment, Starbucks said.

Beginning earlier this year, droughts in Brazil began affecting coffee bean harvests, which have contributed to higher prices.

"For both our packaged coffee and retail business, there are many factors that contribute to our pricing decisions, including competitive dynamics and our overall cost structure," Starbucks said in a statement. "We price our products on a long-term, market-by-market, and product-by-product basis. When making pricing decisions, our goal is to provide value to customers while continuing to operate our business profitably."

The company has diversified its menu beyond just coffee, offering more food and sandwich offerings, the prices of which are not affected by this adjustment. Today, the company is introducing Fizzio Handcrafted Sodas in the south and Teavana Shaken Iced Teas nationwide.

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