How Starbucks Gets Away With Charging a Fortune for Cheap Beans

[marmar]

(Bloomberg) Millions of groggy people this morning grubbed up an additional 5¢ to 20¢ for their Starbucks fix. No biggie. Most probably swiped or scanned and didn't even notice it.

But for Starbucks, those nickels and dimes add up–especially since it is paying less for the beans while ringing up higher-priced lattes.

The cost of coffee on commodity markets–the green, unroasted beans, or “berries,” that are stripped off the branch–has been swooning, thanks primarily to a lot of rain and high temperatures in Brazil.



So, cheaper beans for them, higher prices for you–a simple and strong mix, with financial markets swirled just so and a light dash of marketing.

The Arabica empire said it hadn’t tinkered with prices on many of its drinks for about two years. It has “to balance the need to run our business profitably while continuing to provide value to loyal customers and to attract new customers,” spokeswoman Lisa Passe said in a statement. Translation: Sometimes we realize you’ll pay more. ..................(more)

http://www.bloomberg.com/news/articles/2015-07-07/how-starbucks-gets-away-with-charging-a-fortune-for-cheap-beans

[TreasonousBastard]

1. A first principle of marketing...

charge what the market will bear.

And Starbucks customers will pay through the nose. I don't know why, because I can't see the point of burned coffee, except maybe in a tiny demitasse cup where you're finished before the bad taste hits.

Unlike, say, gas pumps, where there is little brand loyalty or differentiation and the competition is down the block, Starbucks' competition is the coffee snobs' next "find" and price has nothing to do with it. No doubt 7-11 and Dunkin Donuts love Starbucks' prices, because less pressure on them to lower theirs.

But who knows what will happen when the word gets out that McDonald's newest, and very cheap, coffee is actually pretty good-- due pretty much to falling coffee prices. If Mickey D's had decent scones and muffins, they might upset the market.

[merrily]

2. That is not a first principle of marketing. It's a principle of trying to maximize profits, which is

very different. If marketing were all one cared about, a grande would be a penny.

[underahedgerow]

3. I agree, charge what the market will bear. A latte costs about .50c to make. But, somehow

Starbucks' are way, way better than everyone else's ANYWHERE except for Italy. Believe me, I checked.

Everywhere.

Somehow, coffee in Italy is just better. It only costs 1.10e for a damn fine cappuccino. As it should be of course.

But I LOVE Starbucks. I hate the prices, but then that keeps me from over-indulging.

Pumpkin Spice Latte? Christmas blend? Strawberries n Cream Frappaccino? OMFG.... Heaven in a cup.

[romanic]

4. This is a desperate attempt by Starbucks

to make more money. Just like Michael Kors and Coach, Starbucks is EVERYWHERE and is no longer the "cool" coffee cafe it pretends to be and people will begin to see that. It's basically the McDonalds of coffee chains and (imo), the McCafe coffee trumps the overpriced and burnt Sbux.

Though I prefer Tim Hortons and local java places, thankful i have those options. Starbucks is just everywhere.