Starbucks (NASDAQ: SBUX) shareholders take note: Chairman Howard Schultz is predicting a global shortage of gourmet coffee beans as caffeine-drinkers the world over gain more sophisticated tastes.
In a way, this is bullish and bearish for the company. More people drinking expensive coffee is great for Starbucks and its shareholders, but a shortage of beans could lead to higher prices that may or may not be easy to pass on to consumers.
But wait! Schultz doesn't think Starbucks will be affected. In an interview with Reuters, he said that "At the very top of the market where Starbucks plays, I do not believe that others will have access to the quality of coffee that we are buying because we have secured those sources."
Access to beans that other can't get could be a very strong competitive advantage for Starbucks. What if, in addition to the strong brand, people simply can't get the beans the company is selling anywhere else? The interview is a must-read for investors, as Schultz also talks about advertising by other companies actually helps his. He also said China will become Starbucks' second biggest market.
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Reader Comments (Page 1 of 1)
9-08-2007 @ 1:06AM
B. Mason said...
Good I am glad he thinks China is gong to be such a big market. If he continue to push up the price he can count me out and I buy his drinks about 5 times a week.
9-08-2007 @ 7:50PM
Wily said...
B Mason, If you buy Starbucks 5 times a week I'm guessing you pay at least ten bucks a week. Around $500.00 a year. A middle class that is losing ground rapidly is gonna start looking around for places to save. Wonder who will be at the top of their list?