Smucker Raises Folgers Coffee Prices; Will Others Follow Suit?

ORRVILLE, Ohio ( TheStreet) -- J.M. Smucker ( SJM) raised coffee prices for the fourth time this year in response to soaring Arabica costs, and this latest price hike is the largest yet at 11%.

J.M. Smucker, which makes Folgers coffee and also licenses the Dunkin' Donuts brand, raised prices on its coffee products by 11%.

Coffee futures hit a three-decade high of $3.0615 per pound on May 3 but have come down somewhat from that price in recent trading sessions. The commodity most recently settled at $2.6255 per pound on Monday.


J.M. Smucker shares were unchanged in premarket trading Tuesday after closing Monday at $76.91.

J.M. Smucker said that green coffee costs were "significantly higher in the second quarter of 2011." Smucker raised prices of its Folgers and other well-known brands by around 9% earlier this year.

Starbucks ( SBUX) said earlier this month that it already contracted its coffee purchases for the remainder of fiscal 2011, locking in its costs, so it likely won't need to raise prices in the near-term.

Green Mountain Coffee Roasters ( GMCR) said recently that its margins have been growing despite soaring coffee bean costs.


Even so, the Vermont coffee maker said in early May that its margin improvement was a result of successfully passing on higher coffee costs to buyers, and that it would likely raise prices again.

In December, Starbucks CEO Howard Schultz called the 50% spike in coffee futures "tragic," blaming financial speculators for the run-up in prices.

John Culver, president of Starbucks Coffee International, said "we think that these prices are not based on facts given there is no supply problem," according to reports in Swiss newspaper Tages-Anzeiger published earlier this month. "Speculators are at work here."

Peet's Coffee & Tea ( PEET) lowered its profit guidance by 10 cents per share as coffee prices skyrocketed.

Canada-based coffee shop chain Tim Hortons ( THI) 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.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

>To follow the writer on Twitter, go to http://twitter.com/miriamsmarket.

>To submit a news tip, send an email to: tips@thestreet.com.

READERS ALSO LIKE:




>>See our new stock quote page.

Get more stock ideas and investing advice on our sister site, Stockpickr.com.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

If you liked this article you might like

Stocks Explode, Walmart Eyes Stake in India's Flipkart - 5 Things You Must Know

Stocks Explode, Walmart Eyes Stake in India's Flipkart - 5 Things You Must Know

Hormel Foods, Ametek, Applied Materials: 'Mad Money' Lightning Round

Hormel Foods, Ametek, Applied Materials: 'Mad Money' Lightning Round

New Upgrades Keep Boosting Stocks: Cramer's 'Mad Money' Recap (Wed 1/3/18)

New Upgrades Keep Boosting Stocks: Cramer's 'Mad Money' Recap (Wed 1/3/18)

The Fed and The Bull: Cramer's 'Mad Money' Recap (Wednesday 12/13/17)

The Fed and The Bull: Cramer's 'Mad Money' Recap (Wednesday 12/13/17)

Coca-Cola's Stock Is One Part of This Tasty Thanksgiving-Themed Portfolio

Coca-Cola's Stock Is One Part of This Tasty Thanksgiving-Themed Portfolio