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Coffee Talk With Starbucks Exec

Starbucks in Times Square                                                                                                SmartMoney.com

As Starbucks opened its new flagship store in New York’s Times Square – in addition to its 7,000 stores worldwide – Pay Dirt sat down with Starbucks Coffee’s U.S. president Cliff Burrows to talk about coffee prices and consumer trends.

Pay Dirt: Starbucks is not known for cheap coffee. A Venti (Large) Frappuccino costs $5.45. Can we see price hikes on drinks?

Burrows: It’s a fine balance. We continue to review it by store and by individual beverage. We’ve had inflationary pressures in coffee, cocoa, dairy products and fuel, all of which have presented a unique challenge for Starbucks. At times in the past year, coffee prices actually doubled. We raised prices on our whole bean packaged coffee [by 17%] in July. Customer confidence remains fragile. We need to get the balance right and put ourselves in the customer’s shoes, but also we have to live in the real world.

My local Starbucks on 8th Avenue and 19th Street in New York is freezing, and some of the sockets are covered. I get the impression that they want me out.

Tell them. They want your feedback. The temperature depends on the location and the time of year. The vast majority have sockets. Times Square gets a lot of tourist and shoppers, so we need to have more space.

How do consumer demands differ from region to region?

In the U.K., 100% of the coffee is Fair Trade [an organization that promotes better working conditions and sustainability among farmers] and that’s down to consumer demand. Not all the coffee is Fair Trade in the U.S., but it’s 100% ethically sourced. In the U.S., most of the whole beans are Fair Trade.

And what about consumer tastes?

On the East Coast, they like sugar and cream. On the West Coast, they tend to go for dark roast.

Standing in line can be tiresome. Especially at rush hour those queues can be long.

But have you seen how fast they move? Our aim is that you should be looked after in no more than three minutes.

Pay Dirt readers, how long do you stand in line at Starbucks? And what’s the most amount of money you would pay for a coffee?

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    • First off, let me state that this is by no means a book meant for light reading. It was asneisgd to me as part of Professor Kahn’s (the author) Introduction to Marketing lecture at the University of Pennsylvania. Although not the primary text used in class, the Grocery Revolution provides a comprehensive view of the grocery business. It thoroughly discussed the marketing mix (product, price, place, and promotion). Although the book covers everything very well, it tends to become very repetitive, with the same examples cited over and over. Also, there is a huge presence of numbers and percentages from various studies that become overwhelming after a while. The book, however, does provide a very good view of the whole marketing mix in one industry. It is a good book to use as an example for a concrete view of the basic marketing concepts.

    • This is a very good book to bring the reader up to a high level of awaenress on Fast Moving Consumer Goods and grocery in detail.The text builds in a logical way and provides a common sense understanding of how and why things work the way they do primarily for the customer.The bibliography was valuable in confirming my PhD literature search.If there is a negative issue, the book is very much the party line of current retail thinking and does not venture into suggesting, for example that ECR is just another retailer tool to extract margin from manufacturers, or that a Porter value chain approach to optimising the chain based on consumer needs is a potentially better approach.This is a valuable book for Masters degree students without firsthand knowledge of grocrey retailing.

    • said:3. Save about 65% of my gross or $16-17k per month depending on exgahnce rates.4. Right now live in SE Asia but it’s a bit too hot. I like mountains and mediterrain weather so maybe CA or South America.5. 34, again maybe retire at 60 and just sit on a few corporate boards part time. Good life, decent income and company paid travel around the world.. Depends, have no kids at this point so if that changes will have to re-think.BC————————————big cheese is full of BIG BULLS**T!Somebody who can’t even come close to spelling Mediterranean doesn’t make 25k per month and travel around the world on company funds/time.Also Mediterranean weather is found only in countries bordering the MEDITERRANEAN, like Spain, Italy, Greece not CA or South America. Some parts of those regions may have temperate weather.big cheese sounds like a little man full of Velveeta in his momma’s basement with one-hand on the keyboard and the other hand between his legs on something very small.

About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.

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