Dairy Trumps Coffee Hikes At Starbucks

founder, president, chairman and CEO Howard Schultz isn't “

” when looking at dairy prices. In fact, he's more concerned about the price increases seen there than the ones seen in coffee recently. Schultz discussed price increase with CNBC's Jim Cramer on Wednesday. “I think the market, unfortunately, has completely overreacted and misread the coffee situation," said Schultz. "First off, we're bought out almost 18 months. We have been through this many, many times after the last 40 years. The coffee market is going to do what's it going to do. It's less than 20 percent of our cost of goods.” The truth of the matter is dairy is probably a bigger issue for us going forward than coffee, but we will be able to maintain our guidance, our EPS and absolutely manage through and negotiate through any rise in coffee costs. So I think the market should recognize that is a non-event.”

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Currently, Starbucks has no plans to raise prices at their locations. “I think this is a time in America where raising prices is not the right strategy. We have to provide value, we have to provide trust with our costumers. I want to manage through this without raising prices in our retail stores. We may have to raise prices in the grocery business, which is a different story,” said Schultz.