Starbucks Raises Price of 11 Iced Drinks: Why?

Starbucks Announces Price Increase for 11 Iced Drinks in Tall Size

Starbucks Korea announced that it will raise the prices of 11 iced drinks in the tall (355ml) size by KRW 200 starting from next month. This price increase is limited to 2 blended beverages (excluding coffee), 6 Frappuccinos, 1 Fizzio, and 2 Refreshers. Starbucks explained that the price increase is due to the increasing burden of direct and indirect costs and that the price increase for iced drinks was implemented in consideration of decreased demand during the winter season to minimize customer burden.

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Why Only the Tall Size?

A distinctive feature of this price increase is that it only applies to the tall size. A Starbucks Korea official stated, "To minimize the burden on customers, we have decided to apply the price increase only to the smallest size, the tall size." In other words, this price increase does not apply to larger sizes like Grande (473ml) and Venti (591ml), only to the smallest size. This appears to be a strategic decision reflecting the decreased demand for iced drinks during the winter season.

Mobile Gift Cards Still Usable After Price Increase

Although a price increase has been announced, Starbucks added that customers can use previously purchased mobile gift cards without any issues, regardless of the price increase. If the mobile gift card was purchased before November, drinks can be purchased without any additional payment even after the price increase. This can be seen as consideration to ensure customers experience no inconvenience in using their gift cards.

The Background of Starbucks' Price Increase

This is Starbucks' second price increase this year. In August, Starbucks raised the prices of Grande and Venti sizes by KRW 300 and KRW 600, respectively. The reason behind Starbucks' successive price increases is the continuous increase in direct and indirect costs, along with rising raw material prices. Starbucks appears to be adjusting the prices of some drinks to maintain stable operations amid increasing cost pressures.

How Will Consumers React?

Consumer reactions to Starbucks' price increase announcement are varied. While some consumers are relieved that it only applies to the smallest size, others express concerns about the increased burden amidst the recent continuous rise in prices. This increase may be a small burden for frequent Starbucks customers. However, Starbucks emphasizes that the timing considers the decreased demand for iced drinks in winter to minimize customer burden.

Future Starbucks Strategies?

Starbucks may continue strategic price adjustments to respond to rising costs in the future. The price increase for the tall size can be interpreted as a measure to adjust costs without significantly impacting customer beverage choices. Starbucks is also expected to continue efforts to offer beverages at more reasonable prices through various promotions and gift card benefits.