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Starbucks Raises U.K. Prices to Make Up for Milk to Energy

Starbucks Corp. (SBUX), the world’s largest coffee-shop chain, raised beverage prices in the U.K., with lattes, cappuccinos and filter coffee going up for the first time in three years.

The price of filter coffee was increased 5 pence (8 cents), while lattes and hot chocolate were raised 10 pence, the company said in an e-mailed response to Bloomberg questions. Other beverage prices were boosted for the first time in two years. While milk and energy costs gained this year, arabica coffee futures dropped 28 percent in New York.

“The cost of doing business is going up, from wages to milk to energy, so our prices have to increase slightly,” the company said. “Coffee commodity costs historically comprise less than 10 percent of our overall store operating and occupancy expenses.”

Arabica coffee futures declined to the lowest in almost five years today on ample supplies from Brazil and Colombia, the biggest growers while cocoa climbed 22 percent.

European Union cow’s milk prices climbed 18 percent in September from a year earlier, according to farm organization LTO-Nederland. West Texas Intermediate oil gained 2.8 percent in New York this year.

Brazil’s coffee crop will be a record for a year in which trees enter the lower-yielding half of a two-year cycle, INTL FCStone Inc. (INTL) said in a report e-mailed yesterday. Conditions for the development of next year’s harvest appear to be “good,” it said. Farmers in Colombia will reap 10.6 million to 10.8 million bags of coffee in 2013, exceeding a target of 10 million bags, the Colombian Coffee Growers Federation said. A bag of coffee weighs 132 pounds.

Starbucks also said it dropped an additional charge of 35 pence for soy milk, “bringing the price in line with our standard drinks.”

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

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