Starbucks and Coffee Price

!±8± Starbucks and Coffee Price

Hi folks,

I am sure you have all enjoyed a drink of coffee at a Starbucks some time or other. Starbucks of course is a large purchaser of coffee and supplier of retail coffee to the end user, such as yourself, often in the form of a drink. I have just recently had a short visit to Honolulu on my way to Florida and have enjoyed the pleasure of being able to have a drink of coffee of my choice from the extensive menu available, without any preparation of my own and all for a very reasonable coffee price.

I am a West Aussie and we have a similar supply of coffee from the Dome chain of coffee houses. I can also recommend those to anyone visiting our shores. These are also available at a very reasonable coffee price. You can be assured that companies such as Starbucks don't just buy coffee! They wish to be recognized as a leading coffee company and have many strategies in place to ensure the quality of the coffee and the service. This also includes the people and the places from which they procure the coffee.

Using the C.A.F.E. guidelines ensures the product quality, economic accountability, social responsibility and the environmental leadership that is necessary for Starbucks to be a leader in coffee. Starbucks have a goal and that is to have 100% of their coffee certified or verified by an independent third party.

Have you ever wondered what determines the price of your Starbucks drinking coffee?

As you may be aware coffee is a commodity and can be traded on the cash market or the on the futures market such as the Chicago Board of Trade. A futures contract is simply a contract that allows to people (a buyer and a seller) to enter into a contract to supply a commodity (such as coffee) for a fixed contract size and price for some predetermined date in the future, hence a futures contract. In spite of all the noise often made any commodity price is determined by the laws of supply and demand. If you have weather that damages lots of coffee crops then the price will go up. As people react to the news and the situation. Remember that it is not what actually happens that matters but peoples understanding and reaction that drives the price.

A more appropriate term maybe market sentiment. Whilst you will often blame the frontline shop keeper such as your Starbucks or Dome (if in Australia) for your expensive coffee drink they are just seeking to maintain the usual margins associated with retailing coffee. Rest assured if they are not competitive the customers will soon leave. So as you can see you drink an excellent Starbucks coffee and you can trade the commodity coffee on the futures or cash markets.