Starbucks Chairman & CEO Howard Schultz spoke with FOX Business Network's (FBN) Liz Claman about the rising price of commodities, saying “there is no doubt in my mind that financial speculation has driven coffee prices and other commodities to record highs” and the situation is “tragic”. He goes on to say that Starbucks will “not pass this price increase on to our consumer” emphasizing that “great companies find ways to navigate through crisis.” Excerpts from the interview are below, courtesy of Fox Business Network.
On the success of Starbucks:
“Our best days are in front of us, however we have to be extremely thoughtful and disciplined. There is no one at Starbucks doing a victory lap. We have to be extremely humble and at the same time hungry for what we are doing.”
On the cause of the rising price of commodities:
“I don't see any supply or demand issue. There is no doubt in my mind that financial speculation have driven coffee prices and other commodities to record highs. I don't think its sustainable but I do think it's tragic. The coffee farmer and the consumer are suffering. The people who are making money are the people on the sidelines who have nothing to do with coffee.”
On the how the rising price of commodities is affecting their business:
“I don't think it is going to affect our earnings but I think you have to be concerned. We did buy enough coffee for fiscal 11. We will navigate through the crisis of coffee prices if it continues through fiscal 12. What we have said publically is we don't want to pass this price increase on to our consumer. We don't think that's the right thing to do. I think great companies find ways to navigate through crisis. Commodity prices will be what they are. We will navigate through it.”
On whether their growth plan of adding over 500 stores worldwide will result in the company having to shut down stores again:
“I think it would be really bad if we navigated through the worst crisis in America's history and our own self inducted mistakes, fixed all these problems, and then repeated these mistakes. I can assure you that is not going to happen.”
On the Via single serve packs of coffee and whether they would consider a partnership with Green Mountain:
“Via is part of a 24 billion dollar global instant category that has not had any innovation in many years. I can't comment on Green Mountain or what we might do in single servings. We intend to play in the space and when we do we will lead.”
On his view of their food business:
“We recognize that our customers have a need beyond coffee and we want to do food in a big way. But we have been and always will be first a coffee company.”
On the new Starbucks logo:
“The logo has been transformed not because of the 40th anniversary but because of our new strategy. We have had great success bringing Starbucks products to the grocery aisle. Our intent is to move that business in a big way with other products that aren't coffee based. The logo gives us the freedom to do that without coffee in the name.”
On their employee part time healthcare plan:
“Starbucks was leading this way before the government started to address it. The reason was I grew up in a family that had health insurance issues and I saw firsthand the fracturing of the American dream and I didn't want that to happen to Starbucks people. As a result of healthcare reform, our costs will probably go up in 2014. We feel strongly the fabric of the culture and values of the company is linked to us overachieving and taking care of our people. The same way we want to exceed the expectations of our customers, we want to do the same thing with our people. We cant cut healthcare. It's something we just wouldn't do.”
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