U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics > Frugal Living
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Old 01-27-2016, 02:06 PM
3,335 posts, read 3,125,061 times
Reputation: 2337


The commodity prices are falling across the board, but I haven't noticed any cut in my grocery bills in the past year. How so??

Coffee prices fall, but your Starbucks latte won't cost less - Jan. 27, 2016

Prices for coffee beans are at their lowest point in nearly two years. A pound of arabica coffee -- the type Starbucks buys and serves to customers -- has fallen to around $1.11 from $1.65 a year ago. That's a 33% drop.
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," Saleh pointed out.
He has a point. States and cities across the country have been increasing the minimum wage. That affects all stores -- from your local coffee shop to the McDonald's (MCD) and Starbucks of the world.
However, it's worth remembering that in 2014, when coffee bean prices were rising, Starbucks (SBUX), Dunkin Donuts (DUNK) and other coffee brewers raised menu prices, citing the increasing cost of the commodity.
But now the reverse is not true.
Related: Starbucks adding 1,400 new stores in China
In fact, Starbucks slightly raised its menu prices last July even as coffee bean prices were falling. It cited rising costs.
True, minimum wages are rising. And rents have also been going up in many markets, at least for Starbucks, Saleh said. Starbucks has also begun to pay college tuition for 4,000 of its employees.
Those additional costs offset any gains Starbucks may get from the coffee bean price collapse.
Analysts say coffee beans only make up about 20% of Starbucks' overall costs.
Related: Starbucks new latte macchiato
Starbucks says its menu prices depend on a variety of factors and a spokesperson declined to discuss future menu prices, citing competitive reasons.
A Dunkin Donuts spokesperson says the company offers price recommendations to its independent franchisees but ultimately they choose what they charge at each individual store.
Hope isn't all lost. At least not for people who buy their coffee at the supermarket.
Last year, J.M. Smucker cut prices by 6% for Folgers and Dunkin Donuts coffee sold at grocery stores. Starbucks could do the same for its store-sold coffee, says R.J. Hottovy, an analyst at Morningstar.
But you can continue to expect Starbucks cafes to charge those higher prices.
Why? Because it can.
"Starbucks is able to charge those prices...[because] consumers are wiling to pay for it," says Hottovy.
Quick reply to this message

Old 01-27-2016, 02:25 PM
Location: Bronx, NY
9,832 posts, read 21,495,289 times
Reputation: 3503
lol they never drop prices, probably worst kept secret and I don't blame them, frankly unless they see a big drop-off in business there really is no impetus to drop the price.
Quick reply to this message
Old 01-27-2016, 02:52 PM
3,335 posts, read 3,125,061 times
Reputation: 2337
Originally Posted by NooYowkur81 View Post
lol they never drop prices, probably worst kept secret and I don't blame them, frankly unless they see a big drop-off in business there really is no impetus to drop the price.

They raised prices for everything under the excuses of skyrocketing gas prices which increased their costs. And now they see that the gas is flowing into the toilet tubes and they can transport things around for almost free, why is there not cost/price reduction calculated for their customers?

Can't wait for president trump to come into office to get the justice back for our american consumers....
Quick reply to this message
Old 01-27-2016, 04:03 PM
Location: Bronx
14,780 posts, read 17,397,072 times
Reputation: 7508
I generally pay a dollar for coffee, at most 2.50 for a starbucks latte in a bottle at a grocery store. I try to avoid starbucks suburban cultured, sophisticated feel good about yourself with your MacBook, brick and mortar stores when ever I can.
Quick reply to this message
Old 01-27-2016, 04:16 PM
8,218 posts, read 8,498,682 times
Reputation: 10182
Isn't that how it always works? Companies complain when their costs go up, and they announce that they're going to raise prices. But when the costs go down, you can't count on any parallel price drop.

I just sent a lengthy complaint to Southwest Airlines that even though their fuel prices dropped by half, the fare I was paying was exactly the same.

Oh, and I encourage all you to complain, too.
Quick reply to this message
Old 01-27-2016, 04:53 PM
Location: Silicon Valley
16,718 posts, read 20,456,636 times
Reputation: 30701
Any business will sell things for what the customers will pay them for it. I don't buy Starbucks coffee. Can't stand the burnt taste or the price. And in my opinion, anyone walking around with a Starbucks cup is announcing to the world that they have bad taste and throw away their money. The prestige thing is lost on me.
Quick reply to this message
Old 01-27-2016, 08:26 PM
13,710 posts, read 22,826,319 times
Reputation: 18521
I have been paying less for coffee this year than in the past. I order either Community Coffee or San Francisco Bay Coffee Company through THEIR website when they are offering specials.
Quick reply to this message
Old 01-27-2016, 09:41 PM
2,663 posts, read 2,769,813 times
Reputation: 3093
I have paid the same amount for my coffee every year for the last 35 years.

Oh - yea I don't drink cofee
Quick reply to this message
Old 01-28-2016, 01:41 AM
3,463 posts, read 2,290,537 times
Reputation: 3952
I would never buy coffee out some place other than if I want a cup with a breakfast or brunch meal at a restaurant but even then I most often drink water. I would rather put my money towards the food instead of the overpriced beverages.

I also can not stand the taste of Starfunks coffee. It is wretched tasting to me. I don't know if they use chicory in their coffee that gives it that awful burnt taste or what.

I make coffee at home for pennies per cup and I take it in to-go mugs if I need/want to.

I have not noticed the prices of coffee at stores decreasing at all either even though the coffee bean prices, gas prices AND employee wages are all lower. And I doubt the coffee prices will ever be lowered nor any of the other food prices that have continued to skyrocket.
Quick reply to this message
Old 01-28-2016, 03:44 AM
Location: Georgia
11,699 posts, read 8,159,083 times
Reputation: 7958
Trying to find a correlation between the price of a cup of coffee at a coffee shop and the price of coffee beans is like trying to find the correlation between how much electricity your home consumes and painting the walls a different color.

The price of a cup of coffee at a coffee shop is first and foremost based on value. You don't have to buy it, so what is going to drive its price more than anything else is how much the experience is worth to a typical person. (BTW, frugal people aren't "typical".)

As consumer-perceived value and cost of service get closer to each other, the price is also affected to some extent by cost of service. However, the cost of of service is overwhelmingly dominated by labor costs. Facility costs are also quite prominent. There are also costs associated with other consumables, such as cups and sweetener, but don't forget cleaning fluids and other consumables that go into running the operation that do not necessarily go into the cup of coffee you buy.

There are also costs of customer acquisition to consider. That's how much it costs to get consumers like yourself into the store in the first place. Those costs are prodigious, and come in two flavors: The attraction costs and the retention costs. Retention may also factor into the decision to not change prices too often (so regulars get accustomed to paying the same price for the same items, rather than raising suspicion based on the fact that the price for the same thing changes every day). Since raising prices involves risking customer retention, it is better to not lower prices a little when it is just as likely that naturally floating prices would just go back up a few weeks later. Consumers are often irrational and will remember price increases and magically forget price decreases.
Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.

Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics > Frugal Living
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top