Gourmet coffee Shortage?

Starbucks (SBUX) celebrates gourmet coffee bean shortage
Posted Sep 7th 2007 6:45PM by Zac Bissonnette
Filed under: Bad news, Starbucks (SBUX)

Starbucks (NASDAQ: SBUX) shareholders take note: Chairman Howard Schultz is predicting a global shortage of gourmet coffee beans as caffeine-drinkers the world over gain more sophisticated tastes.

In a way, this is bullish and bearish for the company. More people drinking expensive coffee is great for Starbucks and its shareholders, but a shortage of beans could lead to higher prices that may or may not be easy to pass on to consumers.

But wait! Schultz doesn't think Starbucks will be affected. In an interview with Reuters, he said that "At the very top of the market where Starbucks plays, I do not believe that others will have access to the quality of coffee that we are buying because we have secured those sources."

Access to beans that other can't get could be a very strong competitive advantage for Starbucks. What if, in addition to the strong brand, people simply can't get the beans the company is selling anywhere else? The interview is a must-read for investors, as Schultz also talks about advertising by other companies actually helps his. He also said China will become Starbucks' second biggest market.

The problem is there arent enough good quality beans to supply the massive Starbucks expansion and to supply their competitors. And unfortunately Starbucks has the buying power. Scary thought but in 5 years Starbucks may be the only place you can get a decent cup of coffee - for $5.00 per cup.
Unfortuanely his comments are very true.