Price of coffee beans drops, but your Starbucks will cost the same
NEW YORK — Prices for coffee beans are at their lowest point in nearly two years. A pound of arabica coffee — the type Starbucks serves — has fallen to around $1.11 from $1.65 a year ago. But don't expect to save any money.
Officials in Brazil forecast that coffee farmers will have a huge harvest season this year, creating an oversupply of beans, which has led to the drop in prices. But no one expects latte prices to come down.
"You'll never really see anyone cut menu prices," says Peter Saleh, an analyst at research firm BTIG, who covers Starbucks. "You're seeing a pretty big rise in wages, which is the other component of making your coffee."
States and cities across the country have been increasing the minimum wage and that affects all stores — from your local coffee shop to the McDonald's and Starbucks of the world.
However, in 2014, when coffee bean prices were rising, Starbucks, Dunkin Donuts and other coffee brewers raised menu prices, citing the increasing cost of the commodity. And Starbucks slightly raised its menu prices last July even as coffee bean prices were falling. It cited rising costs.
Analysts say coffee beans only make up about 20 percent of Starbucks' overall costs.
— Full disclosure: the reporter for this story owns one share of Starbucks.
