Starbucks is to increase prices at its North American outlets on October 6.

Rising commodity costs have been blamed for Starbucks' first system-wide price increase for more than two years. However, the company's rapid expansion might be a more accurate explanation for the planned price hike, and the aggressive spread of outlets could prove to be a costly, self-inflicted problem.

Citing increasing commodities costs, Seattle-based Starbucks has announced plans to raise prices by 11 cents in its North American outlets. The price hike will take effect on October 6 and will mark the first system-wide price increase since August 2000.

It is not the first company to feel the pinch of skyrocketing commodity prices. Earlier this year, General Mills announced plans to raise wholesale prices by 9% on specific products, also citing increased commodity costs.

Starbucks noted that sugar prices have risen an estimated 39% in the last year, while costs for milk and fuel have grown as well. Futures for Arabica coffee, used in Starbucks' gourmet espresso beverages, have jumped 26% since mid-August, and the wholesale composite price for a pound of coffee beans reached 57 cents in August, up from 47 cents in 2002.

However, the rising cost of commodities may not be the only reason for Starbucks' price hike. The gourmet coffee retailer may be suffering from over expansion and increasing pressure to keep its bottom line growing quickly. The opening of 1,378 new licensed outlets between June 2003 and June 2004 represents a 20% increase in stores. 

The company is aiming to reach 25,000 stores worldwide, but such a large store count could make it difficult to maintain sales. Starbucks, which saw sales of $4.9 billion over the last 12 months, reported growth of 8% in same-store sales for August - its slowest in 14 months.

Despite the price increase, Starbucks doubts that there will be much of an impact on sales. Indeed, with the price of a Starbucks tall latte already costing as much as $3 in certain parts of the US, the price-hike represents an increase of less than 4%. The rapid growth of outlets, on the other hand, merits much stronger scrutiny. Such high-speed expansion may be more of a threat: the brand's gourmet image may suffer from its sheer ubiquitousness.