The Price Of Coffee Prices

1551 Words7 Pages
Now, let’s discuss the factors that determine the supply of the products and detail the future outlook of the supply curve. To ensure compliance with Starbuck’s rigorous coffee standards, Starbuck’s controls coffee purchasing, roasting, and packaging, and the global distribution of coffee used in their operations. Starbuck’s purchases green coffee beans from multiple coffee-producing regions around the world and custom roasts them. The price of coffee is subject to significant volatility. Supply and price can be affected by multiple factors in the producing countries, including weather, natural disasters, crop disease, general increase in farm inputs and costs of production, inventory levels and political and economic conditions. The…show more content…
There is a large variety of beverages available ranging from energy drinks or soda to juice and water. If one considers the social aspect of coffee, alcoholic beverages may also be taken into concern. However, Starbucks sells a large selection of these beverages within its stores. While the majority of coffee drinkers do not substitute away from coffee or coffee related beverages such as espresso or blended drinks, the most direct substitute is tea, which Starbucks sells under its own Tazo Tea brand. Due to current economic conditions and consequently a change in the competitive landscape, Starbucks must be weary of at home production, especially as premium coffeemakers are being built to make single serving cups at a fraction of the cost. Again, Starbucks has covered this segment as it offers Starbucks branded coffee at various grocery store locations and warehouse club stores. Thus, the company has done a good job hedging against the threat of substitutes with the variety of beverages it offers. The threat of customers substituting away from Starbucks for direct competitors such as Peet’s Coffee and Tea is a genuine concern. As they all pride themselves on customer service and specialty drinks, they are truly hard to differentiate. On the other hand, competitors such as McDonalds or
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