Drought Could Drive Up Starbucks Coffee Prices
Struggling Starbucks does not need one more problem. Its same-store sales growth and quarterly revenue are lackluster. Recently, it fired CEO Laxman Narasimhanm and replaced him with Chipotle hero Brian Niccol. What Niccol cannot fix is that coffee bean prices are rising, largely because of drought in area where coffee is grown.
Coffee Prices
Bloomberg reports, “Arabica coffee climbed to the highest since 2011 as the poor weather there impacts trees during the crucial flowering period, too. The usually cheaper robusta coffee variety has also been hit by bad weather, making it now almost as expensive.”
Data from Trading Economics shows that, after a dip in coffee prices in 2023 and early 2024, prices have surged from a low of $172 a pound to $266 recently.
These coffee prices are passed to consumers unless coffee sellers want lower margins or losses.
Starbucks has recently raised prices, which is probably one reason customers are less likely to buy coffee at its stores. Niccol may be able to fix customer service problems, but he can’t make the expanding and worsening drought go away.
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