Coffee is a commodity

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

---

Is Caffeine a Hero or a Villain in Your Life?

Many sober, law abiding people who would never dream of... Read More

Make Money In Your Own Coffee Business

A 2001 survey by the National Coffee Association indicated that... Read More

Cappuccino Secrets: Creating the Perfect Foam

Here is an article that tells the secret of creating... Read More

Coffee Cupping For The Fun Of It

Coffee cupping is a method to compare the different characteristics... Read More

History of Arabian Coffee

Arabian coffee is the quintessential coffee of the world. Arabia... Read More

Coffee, A Brief Overview

The coffee plant has two main species. There is the... Read More

History of Instant Coffee

Mention instant coffee to any connoisseur and you are sure... Read More

Creating the Perfect Foam

Most places that serve cappuccinos in the United States have... Read More

Italian Coffee - Something For Everyone

Espresso, caffè latte, cappuccino; there would seem to be as... Read More

Flavored Coffee Syrup Adds A New Dimension To Beans

Flavored coffee syrup is a popular addition to any coffee... Read More

Coffee - Is It The Most Popular Beverage Of All Time?

Around 850 A.D it is thought that a lone shepherd... Read More

The Good, the Bad, and the Ugly of Coffee Consumption

Coffee is heavily studied, but study results contradict one another.... Read More

Coffee Bean Roaster

The coffee bean roaster is fast becoming a "must have"... Read More

Which Coffees are Highest in Antioxidants?

As researchers learn more about antioxidants with health and disease,... Read More

Gourmet Coffee Beans

You can be a coffee lover without knowing much about... Read More

The Coffee Culture in the USA

It wasn't until I moved to the US that I... Read More

Russian Tea drinking - The beginning

It is believed history of Russian tea drinking tradition have... Read More

Italian Roast Coffee For An Authentic Espresso

One of the things people think of with Italy is... Read More

Brazilian Coffee

Adultery, deceit and politics, all the makings of a modern-day... Read More

3 Simple Tips For Making Perfect Coffee

Want to brew the perfect cup of coffee?Here are 3... Read More

Campfire Coffee Recipes

Want to know a few secrets to making a good... Read More

Starbucks Coffee History

To summarize something as phenomenonally successful as Starbucks coffee history... Read More

Coffee Storage Myths; Freeze Your Fresh Roasted Coffee & Other Popular Misconceptions

So you are finally fed up with that bland black... Read More

Gourmet Coffee Habit Costing Consumers as Much as $1,500 Yearly

Gourmet coffee consumers rarely consider the cost of their daily... Read More

Coffees of India

India produces two fine coffees, but even among coffee devotees... Read More

Factors to Consider When Choosing an Espresso Machine

Buying an espresso machine is an important decision ? choose... Read More

Choosing A Coffee Maker - Tips On Finding The Right Features

Choosing a good coffee maker is not a decision to... Read More

Coffee Club Membership Is A Joy For Coffee Lovers

Coffee club membership is a joy for coffee lovers The... Read More

How to Make a Great Tasting Cup of Coffee - Its Not Rocket Science

There is good coffee and absolutely abysmal coffee. Both may... Read More

How To Clean A Coffee Maker

Ever wonder how to clean a coffee maker the right... Read More

Coffee ?Nectar of the gods

About 850 A.D it is said that a lone shepherd... Read More

Starbucks Coffee Company

Starbucks Coffee Company was founded in 1971 by three businessmen... Read More

Coffee and Alzheimers Disease

With the American population aging rapidly, diseases that affect the... Read More