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Originally published September 22, 2010 at 6:10 PM | Page modified September 23, 2010 at 10:32 AM

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Starbucks raising some prices

Coffee-bean prices hit a 13-year high in commodities markets.

Seattle Times business reporter

Two key ingredients go into a Starbucks drink: One is milk, and when milk prices skyrocket, so do coffee-drink prices.

The other is coffee, and now that coffee beans are more expensive, the Seattle-based coffee-shop chain is raising prices on some drinks in some markets.

As recently as a couple weeks ago, it had said it hoped to absorb the higher green-coffee costs.

Starbucks won't be specific about which drinks will cost more, or where, but gave these clues:

Prices on the most popular drinks, including its $1.50 12-ounce cup of brewed coffee, will stay the same or decrease. For larger and more labor-intensive drinks, prices will rise.

It's unclear what will happen to the price of a Frappuccino, which is both labor intensive and enormously popular, generating $2 billion a year in sales.

Starbucks also might raise prices on packaged coffee in grocery stores, it said in a news release.

The price hikes come in response to high green-coffee prices, which recently hit a 13-year high on the commodities market. Coffee production is expected to pick up during the next harvest, but stockpiles are so diminished that prices have remained high.

J.M. Smucker recently raised prices on its Dunkin' Donuts, Folgers and Millstone coffees because of the increase.

Starbucks buys much of its coffee directly from growers rather than on the commodities market, and it invests in derivatives contracts to hedge against high coffee costs.

Last year, Starbucks raised prices on some drinks, including Frappuccinos, when it also dropped prices on other beverages.

In 2007, it raised prices across the board an average 9 cents because of high dairy prices. That followed a nickel increase a year earlier.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

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