Coffee Is Too Expensive for Starbucks Right Now

Prices are up roughly 90 percent for Arabica beans, thanks to a drought in the world's biggest supplier, Brazil.
Reuters

It’s true. Coffee giant Starbucks has been taking a break from buying beans over the last month, as coffee prices continue to log ridiculous gains.

The Wall Street Journal reports (paywall) that the coffee giant has already locked in prices for all of this fiscal year and some of next fiscal year. But prices are up roughly 90% for Arabica beans this year, thanks to a drought in the world’s biggest supplier country, Brazil. Starbucks thinks it might be wise to stop buying (beyond the deals it already has locked) and wait to see if the market has gotten too panicked about damage to the crop. (The harvest is only just underway.)

“Our strategy is stability,” Starbucks’ head of coffee, Craig Russell, told the Journal. “To have stability, you don’t chase the market.”

To chase this market would be exhausting, even for a coffee giant like Starbucks. Coffee prices have logged some of the biggest gains in the entire world of financial assets this year.

 

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Matt Phillips is a reporter at Quartz, where he writes about finance, markets, and economics.

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