Why Starbucks doesn’t plan on raising prices

by Carl Natale on August 24, 2010

This is a great lesson on coffee pricing:

Smuckers, which sells Folgers and Millstone coffees, recently said it was raising its prices because of the higher cost of beans. Starbucks, on the other hand, said it would absorb the higher cost of beans without raising prices.

“You see it much more in the grocery store because the raw materials are a big component of cost,” Jose Sette of the International Coffee Organization told me. “In a coffee shop, your big expenses are rent and labor.”

via Why Coffee Is Getting More Expensive : Planet Money : NPR.

For what it’s worth, Planet Money is one of best explainers in journalism. They do a fantastic job of making economic concepts accessible.

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