The caffeine fix customers crave at their local Starbucks is about to get a little pricier.
Starbucks (SBUX) on Friday confirmed plans to raise prices for its packaged roast and ground coffee sold at major U.S. retailers and some coffee prices at its roughly 7,000 company-owned stores. The coffee giant said the price increases, which vary by market, increase the average price customers will pay by less than 1% at Starbucks’ stores.
For example, prices will rise by about 10 cents to 15 cents for grande and venti (Starbucks lingo for medium and large) brewed coffee in most markets. Tall (or small) and venti latte prices will climb between 15 cents and 20 cents in some markets. The price increases go into effect on Tuesday. Other popular items, like the grande latte and frappuccinos, won’t see their prices rise.
At grocery stores and other major retailers, Starbucks is raising the list price of ground packaged coffee by an average of 8% on July 21. Starbucks spokesman Zack Hutson said the increase effectively restores prices to their April 2013 levels—when prices were cut 10%. Starbucks last increased prices on packaged coffee in March 2011.
A number of competitors have announced price increases in recent months, with many blaming higher coffee costs. For example, J.M. Smucker (SJM) earlier this month raised the price for most of the packaged coffee products sold in the U.S. by an average of 9%, mostly consisting of coffee sold under the Folgers and Dunkin’ Donuts brand names.
A drought during the rainy season in Brazil sent coffee futures sharply higher earlier this year and companies that sell coffee are beginning to feel the impact. But Starbucks—which locks in orders many months in advance of when it’ll need the coffee—said many factors are considered before adjusting prices.
“We price our products on a long-term, market-by-market basis, and product-by-product basis,” said Hutson. He said coffee costs historically account for less than 10% of operating costs, so other factors, like fuel, energy and labor costs, are also considered.