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 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

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

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!