Starbucks Corporation (SBUX) Price Hike a Gain for Others

Starbucks Corporation (NASDAQ:SBUX) may have paved way for other small stores to gain market share in the industry after deciding to increase the prices of its commodities by 8%. It was only last month that the company increased its prices, something that should not go well with consumers amidst the slow growth in the economy. Joe’s Chief Financial Official, Caroline Barad, in an interview on Bloomberg, has said that the move by Starbucks to raise its prices will force them to squeeze their margins in order to retain customers.

Starbucks Corporation (NASDAQ:SBUX)

“I think that it is a great opportunity for people who are standing in line to, kind of ,pick their heads up and say what else is out there and see us, many of our stores are right near Starbucks so to come over and try us, it is a good opportunity” said Barad.

The main problem at the moment for Starbucks Corporation (NASDAQ:SBUX) is the fact that smaller stores like Joe are closely watching their prices with a view of ensuring theirs are lower in a bid of attracting more customers. Starbucks has been forced to raise the prices for coffee as a result of a shortage of supplies, especially in Brazil with prices having soared by 46%.

Taking into consideration the way Starbucks Corporation (NASDAQ:SBUX) is big, it is able to source out supply long down the road to ensure they are not highly affected by the changes in supply chains. Starbucks is currently sourcing 18 months in advance with small stores being limited to less than 12 months

Smaller coffee joints are sprouting across the country essentially meaning increased competition for Starbucks at the current rate that it is increasing its prices. The other concern is that most of these small coffee joints, according to Barad are always more than willing to take home low margins as long as their prices are lower in the market compared to those of Starbucks Corporation (NASDAQ:SBUX).

“We raised our prices slightly in April, but we are constantly watching our margins tight-tight everything, you know the coffee market fluctuates every single day so to get that coffee at  a consistent price to the end buyer is always of constant challenge,” said Barad.

Disclosure: none

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!