Starbucks Hedge Funds
Starbucks CEO Blames Hedge Funds for Commodity Prices
It's been a good week for Starbucks CEO Howard Schultz, as his company posted a 20% increase in second quarter profits. Still, Starbucks might take a hit as the price of coffee and other commodities hits impressive heights. As the coffee price hits a 34 year high of $3 per pound, Schultz explains hedge funds role in the rising price of commodities.
Q: How are you dealing with soaring coffee prices?
I think everyone in the food business is quite concerned about rising commodity costs and specifically for us, coffee. Especially when I know for a fact there's no supply problem.
Q: It's all about speculation you've been quoted saying?
Well I just gave a key note address at the National Coffee Association in New Orleans about a month ago. I met one-on-one with key suppliers. There wasn't one supplier that indicated to me that there was any supply issue. So we're living at a time right now where financial speculation index funds, hedge funds have created a rush of very, very high prices. And not only coffee, corn, sugar, cotton and obviously oil, and unfortunately it has to hit the consumer. We're working very hard not to put us in a situation where there's going to be pain for the customer.
Q: So you're holding back passing it on to the customer?
We are. We've also told the Street that regardless of where coffee prices go, we'll be able to navigate through this in 2012 but it's challenging.
Source
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