At Starbucks they obviously need coffee. To insure that they get the coffee at a good price, Starbucks has chosen to buy the coffee fields, rather than pay an advanced contract price for the coffee beans. Just think it's Starbucks was buying coffee from Cuba, and that hurricane that came through Cuba two months ago destroyed all the coffee beans, in this case Starbucks cannot sell you your Latte. That would really piss you off. Starbucks knows that if they piss you off; you may never come back again. Also if Starbucks kept raising and lowering the price of coffee they sell in the store you might get upset. But since the coffee is a commodity, the price would fluctuate. And Starbucks knows since they buy so much coffee, that they would have to guarantee they have the coffee, and then they would have to pay a premium price for the contract for coffee.
Mr. Schultz the founder of Starbucks, a former Chicago boy and commodity trader knows that with the volume of coffee it's Starbucks sell, if they entered into contracts to buy the coffee in advance then they would also be raising the price of the commodity itself. Now Starbucks the seller to the end user owns 23 percent of all the coffee plantations in the world. Are they manipulating the commodity, sure they are. But if they fail to manipulate the commodity of coffee and sell retail the large volume of coffee they do, then they would have decreased margins of profits. That would hurt shareholder value, quarterly profits and there is no way Starbucks would have reported a 37 percent gain in profits in the fourth quarter of 2001. Not to mention the exponential growth in stores and profits since their original IPO. You should not be surprised, that Starbucks has been able to do this.
You should not be surprised that Folders coffee and other name brand coffees have increased their prices in the stores. Its Starbucks owns 23 percent of all plantations of coffee in the world then that leaves 77 percent. Now those other companies are vying for that 77 percent since the total production of coffee available to the commodities exchange is 23 percent less. Therefore simple supply and demand in the irregularities of weather, which limits output of a plantation, will tend to drive the price and upward direction. It's Starbucks does not need all the coffee for its own stores, it can now sell its coffee beans on the open market to other companies at wholesale level. That is of course before the coffee beans actually get branded Starbucks. At that point they are just the commodities of coffee beans.
"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs
Flavored coffee syrup is a popular addition to any coffee... Read More
The stress of unemployment can really take a toll on... Read More
There is good coffee and absolutely abysmal coffee. Both may... Read More
Ever wonder how to clean a coffee maker the right... Read More
Coffee enemas detoxify the liver, as well as cleans the... Read More
When you enter a coffee house, you have a multitude... Read More
The beverage called coffee is the result of mixing dry... Read More
Adultery, deceit and politics, all the makings of a modern-day... Read More
Coffee club membership is a joy for coffee lovers The... Read More
There are many refreshing iced coffee recipes available, and we... Read More
It wasn't until I moved to the US that I... Read More
Gourmet coffee lovers have been seeing a few new terms... Read More
Having a hard time giving up your 4 cups of... Read More
Want to know a few secrets to making a good... Read More
When it comes to coffee makers there are thousands to... Read More
Here are some facts about the relationship between coffee and... Read More
All the experts agree. People who want the best flavor... Read More
Here is an article that tells the secret of creating... Read More
Type 2 diabetes mellitus is one of the most rapidly... Read More
Like much of Hawaii, Kona offers ideal climate conditions for... Read More
Most places that serve cappuccinos in the United States have... Read More
Many of us rely on coffee to get us going... Read More
With the spread of various coffee beans into our lives,... Read More
One look at a line at the local Starbucks in... Read More
Choosing a good coffee maker is not a decision to... Read More
In the early days of the coffee craze, before the... Read More
For years, the idea of roasting your own coffee beans... Read More
India produces two fine coffees, but even among coffee devotees... Read More
As researchers learn more about antioxidants with health and disease,... Read More
Coffee is heavily studied, but study results contradict one another.... Read More
A researcher has stirred up the commuter coffee mug with... Read More
An autopsy released this week has found caffeine to be... Read More
Around 850 A.D it is thought that a lone shepherd... Read More
Espresso, caffè latte, cappuccino; there would seem to be as... Read More
Having a hard time giving up your 4 cups of... Read More
Gourmet coffee consumers rarely consider the cost of their daily... Read More
A large percentage of the population loves to drink both... Read More
Type 2 diabetes mellitus is one of the most rapidly... Read More
There is good coffee and absolutely abysmal coffee. Both may... Read More
Mention instant coffee to any connoisseur and you are sure... Read More
Ethiopia is the birthplace of coffee, yet it is not... Read More
Specialty gourmet coffee is a very hot commodity in today's... Read More
Buying an espresso machine is an important decision ? choose... Read More
Starbucks Coffee Company was founded in 1971 by three businessmen... Read More
In Kenya coffee production dates back several hundred years. Coffee... Read More
The beverage called coffee is the result of mixing dry... Read More
Who doesn't love solving a good mystery? Is the Loch... Read More
The coffee plant has two main species. There is the... Read More
A researcher has stirred up the commuter coffee mug with... Read More
When it comes to coffee makers there are thousands to... Read More
A 2001 survey by the National Coffee Association indicated that... Read More
With the American population aging rapidly, diseases that affect the... Read More
The Europeans got their first taste of Turkish Coffee, and... Read More
If we look at commodity trading from a purely conceptual... Read More
Coffee - THE Drink of ChoiceDid you know coffee is... Read More
Many of us rely on coffee to get us going... Read More
The barista is the Italian word for the skilled person... Read More
Ever wonder how to clean a coffee maker the right... Read More
Do you remember your first experience with coffee? I'm sorry... Read More
Flavored coffee syrup is a popular addition to any coffee... Read More
All the experts agree. People who want the best flavor... Read More
American coffee? Technically there is no such thing, at least... Read More
Marylyn Monroe famed amongst other things for her love of... Read More
When you grab that morning cup of java, you're probably... Read More
Many sober, law abiding people who would never dream of... Read More
Are you a coffee addict? Are you searching for a... Read More
Coffee |