Starbucks Corp said it plans to charge more for large-sized and labor-intensive drinks because of surging prices for coffee and other commodities.
The world's biggest coffee chain, which expects to maintain or lower the price of certain espresso drinks and its "tall" 12-ounce brewed coffee, said it might raise the price of packaged coffee sold through grocery stores and other channels. Starbucks declined to disclose the magnitude of price adjustments. Shares inched up 0.5 percent in extended trade. Wall Street had expected such a move from the company.
Coffee prices are flirting with a 13-year high and Starbucks' move comes more than a month after mass-market coffee sellers raised prices on their well-known grocery brands.
J.M. Smucker Co on August 3 boosted prices for most of its Folgers, Dunkin' Donuts, Millstone and Folgers Gourmet Selections coffees in the United States by an average of 9 percent. Kraft Foods quickly followed with U.S. price hikes on select Maxwell House and Yuban ground and instant coffees.
Starbucks had been holding the line and absorbing the higher costs.
"The extreme nature of the cost increases has made it untenable for us to continue to do so and we have been forced to take the steps we announced today," Chief Executive Howard Schultz said in a statement.
Starbucks also stood by its forecast for earnings of $1.36 to $1.41 per share for fiscal 2011. Analysts, on average, are expecting earnings of $1.43 per share for next year, according to Thomson Reuters I/B/E/S. Its current fiscal year ends on October 4.
Rival McDonald's Corp said it is "business as usual" when it comes to the prices for its specialty coffee drinks, which sell for less than competing Starbucks beverages.
Shares in Starbucks, which on August 17 said it did not plan to raise prices despite the surging popularity of green coffee, rose to $26.06 in extended trading from their close of $25.93.
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