Smucker’s hikes Folgers, other coffee prices 10%

By Reuters
Posted Feb. 8 at 10:30 a.m.

J.M. Smucker Co., the top U.S. packaged coffeemaker, raised prices for most of its coffee products, including Folgers, in a widely expected move as the cost of beans has soared 85 percent in eight months.

Though this was the third price increase in less than a year by theĀ  company known as the trendsetter, many in the industry have wondered how the company managed to wait so long as tight supplies of washed arabica coffee beans have continued to fuel the price rally.

The company, which is also a Dunkin’ Donuts licensee, said Tuesday that it raised prices by an average of 10 percent for most of its coffee products after a spike in green coffee costs. Smucker’s acquired theĀ  Folgers brand in November 2008.

This is the company’s biggest price increase in the last year, after it raised its prices in August by about 9 percent, which was then the largest widespread boost in years, and in May by about 4 percent.

Arabica coffee futures have surged 85 percent since June, reaching $2.54 per pound last week, a 13-1/2 year high.

In the last few months, the high prices have hurt results at coffee companies, including Starbucks Corp., the world’s largest coffee chain.

Smucker’s, which competes with Kraft’s Maxwell House and Yuban brands, had warned in November that rising coffee costs may hurt its fourth-quarter profit and said it might have to raise prices.

Kraft, which typically does not raise its coffee prices until a change has been made to Folgers, could no longer hold back and raised prices in roast and ground Maxwell House and Yuban coffees by about 12 percent in December.

A Kraft spokeswoman did not have any comment on prices after Smucker’s move, though the company typically follows suit within a few days.

Smucker’s shares, which have risen 8 percent since the company announced its May price rise, were up 86 cents, at $63.73, Tuesday on the New York Stock Exchange.

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