Starbucks Corporation (SBUX) To Cut Grocery Coffee Prices By 10%

Starbucks Corporation (SBUX) To Cut Grocery Coffee Prices By 10%

Starbucks Corporation (NASDAQ:SBUX) announced Friday of its plans to reduce the grocery list prices of its namesake and Seattle’s Best packaged coffee by a minimum of 10 percent on May 10, reports Reuters. The cut in the prices results from the fall in the coffee costs and will also help the company to boost sales through supermarkets and other retailers.

Starbucks Corporation (NASDAQ:SBUX) is cutting prices to “provide value and continue to attract new customers,” said a spokesman from the company

The cut in prices will depend upon the store and size of the package, but most of the stores will lower the prices of 12-ounce bags of Starbucks and Seattle’s Best Coffees by $1. So, from next month onwards, the expected retail price of a 12-ounce package of Starbucks coffee will come down to $8.99 from $9.99 and Seattle’s Best will go to $6.99 from $7.99.

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According to a company’s spokeswoman Lisa Passe, the price cuts are only applicable to packaged coffee sales by other retailers and the price of packaged coffee and prepared drinks sold in the company’s own shops will remain unchanged.

Coffee grocery segment is witnessing a fierce competition with other players already reducing the prices earlier this year. In February this year, top U.S. packaged coffee maker The J.M. Smucker Company (NYSE:SJM) slashed the retail prices of some of the popular brands like Folgers and Dunkin’ Donuts, by around 6 percent. Kraft Foods Group Inc (NASDAQ:KRFT) also reduced the price for its Maxwell House and Yuban brands.

The cut in prices have come after a long time from Starbucks Corporation (NASDAQ:SBUX). CEO Howard Schultz had been blaming speculators for the driving prices of coffee and other commodities, much more than they should be. The last increase from the company came in 2011, when the bagged coffee prices grew by 12 percent leading to a 17 percent increase in prices in Starbucks cafes.

In mid-March, Arabica coffee futures were at their lowest levels in nearly three years, at $1.3405 per lb. The futures were down by more than 55 percent from the 34-year high above 3 per lb in May 2011. The price drop has been so intense that some instant coffee makers, which is generally made from cheaper, and more bitter-tasting robusta bean, switched to arabica beans.

Also starting in May, Starbucks Corporation (NASDAQ:SBUX) will include a code on bagged coffee sold in groceries, which can used by the customers toward its loyalty program.

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