Starbucks to boost prices while cost of coffee continues slide

NEW YORK — Starbucks wants a few extra pennies for that latte.

The Seattle-based coffee company says prices will rise nationally by 1 percent on average starting on Tuesday.

The price hike comes despite falling coffee costs that have boosted the company’s profits.

The price for medium and large brewed coffees, Frappuccinos and some other beverages won’t change in most of its 11,000 U.S. cafés.

“Less than a third of beverages will see a small increase in most stores,” said Lisa Passe, a Starbucks spokeswoman. She noted that the increases will vary by region. It’s the first price hike most customers will have seen in about two years.

Lower coffee costs are expected to continue padding the company’s profits. Earlier this month, Ja nney Montgomery Scott analyst Mark Kalinowski issued a note to investors saying Starbucks is likely to benefit from lower coffee costs for the next few years. Kalinowski estimated that Starbucks’ coffee tab, $1.4 billion in 2012, would fall by about half.

Starbucks notes that coffee represents one of its many costs and historically has accounted for less than 10 percent of overall expenses. Others include rent, labor, marketing, equipment and ingredients such as milk and sugar.

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