The very next day Starbucks ( SBUX) 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 Kraft Foods ( KFT) and Green Mountain Coffee Roasters ( GMCR) 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
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