Quick, quick, slow.
Starbucks, after a rapid start to 2017 for hedging coffee beans, has taken its forward purchasing drive off the boil as arabica prices have eased.
As of late July, the group had priced 70% of its coffee needs for its current financial year (which ends next October), well ahead of a comparable figure of “more than 50%” a year before.
Three months later – a period during which arabica coffee futures have dropped some 20% on a spot contract basis, undermined by some big hopes for Brazil’s 2018 harvest - Starbucks has progressed this year’s hedging total by only a further 5 points, to 75%.
That narrowed the advance over last year, when the coffee giant revealed a figure of “about two-thirds” for its pricing progress.
And it left the group well behind its pace two years ago, which had reached “over 90%” by now.
‘Competitive pressures on the rise’
OK, in theory, there is another possible explanation for the marginal advance in Starbucks’ percentage hedged figure – that its coffee needs have grown substantially, meaning it has a bigger purchasing requirement than originally thought.
However, that looks unlikely given that reported sales growth at established global cafes in the quarter to October 1 of 2%, below the 3.2% expected by investors, according to Consensus Metrix.
The group also cut its long-term target for earnings target growth to “12% or greater”, from a previous figure of 15-20%.
Scott Maw, the group’s finance director, told investors that “competitive pressures” were “on the rise”, although underlying earnings per share for the latest quarter, at $0.55, were in line with market forecasts.
And, as to whether the coffee strategy has worked, at least Mr Maw could say that "neither foreign exchange nor commodities are expected to have a major impact on year-over-year profit growth" ahead.
Still, shares in Starbucks shares stood 3.3% lower at $53.07 in after-hours trading.