Folgers' Management Announces Imminent Price Increase
Amid the fiscal babble of an earning report, the parent company of Folgers coffee has a message coffee drinkers may find difficult to swallow.
The J.M. Smucker Co., which sells Folgers, Café Bustelo and Dunkin brand coffee, reported on the company’s earnings last week, with CEO Mark Smucker offering a sobering prediction of what was coming in terms of coffee prices.
“The coffee category continues to experience commodity volatility and overall meaningful inflation,” he said in the remarks posted online.
“In response to recent higher green coffee costs that we will begin to incur during the first quarter, we are taking a list price increase across parts of our portfolio in early June,” he said.
In trying to say the bite won’t be too bad, he added that the company seeks “a balance between recovering inflationary input costs, while providing consumers with attractive options ranging from value to premium.
“We expect the coffee category to remain resilient, despite recent inflationary pressures and volume declines, given consumers’ love of daily coffee rituals and continued strength in at-home consumption,” he said.
Bloomberg noted that “futures for robusta beans used in instant coffee have soared more than 50% this year to fresh highs as production in key grower Vietnam buckles under drought.”
Prices for the arabica coffee bean are also climbing.
Imported coffee prices have risen 65 percent January 2021, according to an article in Food Manufacturing penned by Cobank.
Consumers are now paying 20 percent more for their ground coffee than in April 2023.
CoBank’s Knowledge Exchange says that trend will continue.
“Following the pandemic when restaurants were closed, people have gained some experience trying to replicate their favorite dining-out experiences at home,” said Billy Roberts, senior food and beverage economist for CoBank.
“It wouldn’t be surprising if, due to sharply higher coffee prices, some consumers turn to recreating their favorite coffee or espresso drinks at home with store-bought flavorings or inclusions,” he said.
With supply issues in nations such as Brazil and Colombia, as well as Vietnam, prices will not be falling any time soon, he said.
Bidenomics! Soaring Coffee Prices Force Folgers’ Owner To Increase Supermarket Prices#coffee #inflation #bidenomics
https://t.co/oEiATAXBy6— KAG3-CO (@Kag3C) June 8, 2024
“Nearly all of the coffee consumed in the U.S. is imported, so higher prices are likely until the production challenges subside,” said Roberts.
“While it’s highly unlikely U.S. consumers are going to significantly curb their consumption due to high prices, they may get creative with at home coffee drinks and lean on store-bought flavorings to replace more expensive specialty drinks from coffee shops,” he said.
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