Coffee Buzz

Photograph by Mandel Ngan/AFP/Getty Images

Starbucks' announcement of an imminent price hike had the predictable effect of making it a grumpy morning for yuppies across the nation.

Caffeine aficionados learned that as of July 31, they will have to pay an average of 9 cents more for that familiar morning macchiato.

This only 10 months after Starbucks last increased prices (by an average of 5 cents), which came a full two years after the hike before that, in September 2004.

The accelerating increases suggest that Starbucks, like everyone else, is feeling the pinch of rising energy and food costs. Most retailers have found themselves stuck sacrificing margins to maintain their price points and retain their customers.

But unlike everybody else, Starbucks doesn't have to. Face it -- no one is going to change coffee shops over an extra dime. America is addicted to Starbucks' coffee, but we're also addicted to its overstuffed armchairs, jazz compilation CDs, and the chocolate covered graham crackers for sale at the register.

Starbucks' decision pass the cost on to the consumer reflects a company supremely confident in its brand equity.

(Certainly founder and chairman Howard Schultz has reason to be supremely confident. Just last week he exercised options for more than 4.1 million shares of Starbucks stock at $4.60 a share. The stock closed at $27.71 that day, giving him a paper profit of a bit more than $96.5 million.)

Everyone loves to get up in arms about Starbucks' cappuccino dictatorship, but this time it's hard to drum up a case.

Think of it this way: while the Starbucks increase just pushed up the cost of fueling your feet a paltry 3 percent since last October (around the pace of inflation), the price for a gallon of gas has increased about 33 percent in the same time (though, a gallon of unleaded still costs less than a grande latte).

Yet as with postage stamps, even if the small boost in price won't have an appreciable impact on anyone's lifestyle, that hasn't stopped it from spoiling everyone's mood.

by Liz Gunnison