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Starbucks (SBUX) Bagged Coffee

In May Starbucks announced a 17% price hike in bagged coffee, underscoring the pressure coffee retailers are facing as Arabica coffee bean futures traded near decades-long highs.


Coffee futures hit a three-decade high of $3.0615 per pound on May 3 but have come down somewhat from that price in recent trading sessions.

For Starbucks, the move to raise prices came as somewhat of a surprise, as the coffee shop chain said earlier in the month that it had already contracted its coffee purchases for the remainder of fiscal 2011, locking in its costs.

Starbucks said the price hikes will be applied to bagged coffee sold at its cafes in the U.S., effective July 12. It was the first price increase on caf'-sold bagged coffee in two years. In March Starbucks hiked the price of bagged coffee sold at supermarkets by 12%.

In December, Starbucks CEO Howard Schultz called the 50% spike in coffee futures "tragic," blaming financial speculators for the run-up in prices.

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