Dive Brief:
- J.M. Smucker plans to raise coffee prices in the coming months due to rising sourcing costs, resulting in an overall hike of more than 20% this year, executives said on an Aug. 27 earnings call.
- The food and beverage company will likely lift prices for a third time this year “in the early winter,” CFO Tucker Marshall said. Smucker previously raised prices in May because of tariffs on imported beans and made another hike in August.
- "We now anticipate a higher U.S. tariff impact on green coffee costs and we are working to mitigate these cost increases through a combination of alternative sourcing strategies, supply chain optimization, and responsible pricing," CEO Mark Smucker said in prepared remarks.
Dive Insight:
The expected price hike in early winter would be the fifth time Smucker has increased coffee prices since June 2024, according to the company’s previous earnings call in June. Other importers have done the same, fueling a nearly 21% year-over-year increase in the cost of joe, according to the August Consumer Price Index.
Smucker buys 500 million pounds of unroasted coffee beans annually, mainly from Brazil and Vietnam. Imports from the two countries face total U.S. tariffs of 50% and 20%, respectively. Outside of coffee, Smucker sources most of its U.S. production domestically.
The food and drink maker expects the higher prices to dampen coffee sales volume in the current fiscal year, according to Marshall. However, the company expects to generate $100 million more in the current fiscal year due to its pricing hikes.
"We expect the coffee category to remain resilient, despite recent inflationary pressures, given consumers’ love of daily coffee rituals and continued strength in at-home consumption," Smucker said.
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