Retail Coffee Prices Climb
Folgers takes a price increase but will others follow?
Albany, NY: Some of America's favorite coffee brands are about to get more expensive on retailer shelves. J.M. Smucker's announced a 6% price increase January 11th, on whole bean and ground varieties on Folgers, Dunkin Donuts and Café Bustelo brands. The new pricing is already being reflected by retailers, according to the latest data from Price-Trak, an Albany, N.Y.-based market research company specializing in price and trade promotion reporting of 150 standard categories.
The 6% price increase is being seen on Folgers items, however, the price advance for Café Bustelo was an average of 10% increase while Dunkin Donuts received a 7% increase on 12 oz. sizes. As of February 4, PRICE-TRAK reported no other coffee brands have followed these increases apart from Mellow Joy, a small regional brand that reported a 6% price increase.
This is the latest of many price changes by Smuckers coffee brands over the past 4 years. Most recently, in May 2016, J.M. Smucker's took a 6% price decline on many of their coffee brands. This was their second such decline in consecutive years. Maxwell House took a matching 6% price decline in October.
Andy "Dewey" Rumpelt, president of Price-Trak, noted: "I think we will see other major brands, like Maxwell House follow suit, unless we see coffee futures drop due to favorable weather patterns in Brazil and elsewhere." Not all coffee brands react to changing coffee costs like the two largest packaged coffee companies, Smucker's and Kraft Heinz, which owns Maxwell House and Gevalia. Other brands like Starbuck's and Eight O'clock appear to wait for longer term trends before reacting to cost volatility on coffee beans", according to Rumpelt, who cited data from Price-Trak, which has been monitoring retail food costs for 40 years.
In fact, just this past week, Agribusiness Intelligence, is reporting that much wetter weather is forecast in Brazil's coffee region, which should aid cherry growth and may keep coffee costs for Arabica beans suppressed. Brazil is the largest exporter of Arabica coffee beans in the world. Arabica beans are primarily used for packaged coffee, (while Indonesia is the largest exporter of Robusta beans, primarily used in Instant coffee's). This may mean that the cost of coffee in 2017 may not be as high as experts are predicting, and may mean that the rest of the coffee segment holds retail pricing.
If Maxwell House and other brands do not follow the latest price increase by Smucker's, the increase by Smucker's can put significant pressure on their profitability, as increased prices usually result in lower volume.
Price-Trak, National Promotion Reports LLC (formerly Leemis, Promodata), provides specialized competitive cost and trade reports, monitors 150 standard warehouse categories including many organic items, and provides manufacturers with easy-to-use syndicated reports to monitor price changes and trade allowances. Price-Trak also supports grocery wholesalers with pricing and promotional allowance understanding to help ensure grocery wholesalers and independents have the tools necessary to remain viable channels and compete effectively. www.natpromo.com