Saturday, September 23, 2006

Roasters say no plans to match Starbucks coffee price hike

illustration by fred wickham
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By Susan Buchanan
Of Dow Jones Newswires

NEW YORK (MarketWatch) -- Major U.S. coffee roasters say they have no immediate intention of matching a hike in prices planned by Starbucks Corp. (SBUX) for Oct. 3. "P&G currently is not planning to increase list prices for any coffees within our portfolio," said Lars Atorf, spokesman for Procter & Gamble (PG), maker of Folgers and Millstone brands. "This might have to do with the fact that the cost structure of P&G's product portfolio is certainly very different from Starbucks'."

Starbucks will raise prices 5 cents per cup and 50 cents per 16-ounce bag in early October, citing rising fuel, health-care, labor and raw-ingredient prices. Larry Baumann, spokesman for Kraft Foods, maker of Maxwell House and Yuban, said "for competitive reasons we don't speculate on future actions." Roasters have been watching arabica prices, which sped to 3-month highs on the New York Board of Trade in August and then backed down.

Coffee companies are also tracking robusta prices--which account for 30% to 70% of beans used in top, commercially-sold arabica blends in the U.S. London robusta futures rallied to almost 8-year highs in early September but have since eased. P&G and Kraft use robusta beans, while Starbucks says it purchases only arabicas. Starbucks last raised prices on its drinks in 2004 and last hiked whole-bean coffee prices 9 years ago.