ORRVILLE, Ohio (
(SJM - Get Report)
cut the price of its Folgers and
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brands of packaged coffee as commodity prices for green coffee beans came off decades-long highs.
The move to decrease consumer prices for packaged coffee sold in U.S. supermarkets reversed a trend seen earlier this year when Smucker raised coffee prices on four separate occasions in response to soaring Arabica costs.
Smucker's latest coffee price hike, announced in June, was the steepest at 11%
The very next day
(SBUX - Get Report)
announced a 17% price hike in bagged coffee, underscoring the pressure coffee retailers were facing amid soaring coffee costs. It was Starbucks' first price increase on café-sold bagged coffee in two years. In March, Starbucks hiked the price of bagged coffee sold at supermarkets by 12%.
Smucker said Tuesday it decided to cut prices by an average of 6% as futures for green coffee prices have fallen, leaving investors wondering if Starbucks, Maxwell House maker
Green Mountain Coffee Roasters
would follow suit.
In May, Kraft hiked the price of its Maxwell House coffee by 22%, or 70 cents a pound, the largest of four price increases in a year. Green Mountain said in May it had already passed on higher costs to its customers after raising consumer prices by 10% to 15% last September, adding that it would raise coffee prices by another 10% by mid-2011.
Coffee futures hit a 34-year high of $3.0615 per pound on May 3 but have come down since then, with September contracts most recently trading at $2.4525.
In December, Starbucks
CEO Howard Schultz called the 50% spike in coffee futures "tragic,"
blaming financial speculators for the run-up in prices.
Peet's Coffee & Tea
lowered its profit guidance by 10 cents a share earlier this year as coffee prices skyrocketed. Canada-based coffee shop chain
did not specifically mention how
rising coffee and commodity costs
affected its results last quarter, but reported that its cost of sales jumped 15.9% last quarter to a 62.5% share of total revenue, up from 59.6% share in the year-earlier period.
Shares of J.M. Smucker fell 1.2% to $74.97 in morning trading Tuesday. Starbucks lost 0.2% to $38.34; Kraft was lower by 1% at $34.35; Green Mountain shed 2.3% to $99.98; Peet's fell 0.4% to $56.83; and Tim Hortons lost 0.7% to $46.47. Dunkin' Brands gained 0.5% to $26.75.