High coffee prices spoil Starbucks profit report

Starbucks has warned the rising cost of coffee will hit profits in the future as it announced record earnings in the last quarter.

The American cafe chain made net earnings of $347m in the last quarter of 2010, a 44 per cent increase on the same period in 2009. Revenue stood at $3bn, an increase of 8 per cent on the year before.

However, a combination of poor weather in Colombia, crop disease fears and a greater global demand have forced wholesale coffee prices up by nearly three-quarters since last summer.

This rise in Starbucks' cost base was reflected in after-hours trading, when shares in the company fell by 3 per cent.