Smucker hiking prices on K-Cups

by Monica Watrous
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Folgers K-Cups will cost more starting next year.

ORRVILLE, OHIO — As higher costs for coffee persist, the J.M. Smucker Co. said it is raising prices on its K-Cup packs sold in the United States by an average of 8%. The price hike for portion packs under Folgers, Folgers Gourmet Selections, Café Bustelo and Millstone brands will take effect on Jan. 5, 2015.

In June, Smucker announced plans to increase the list price for the majority of its packaged coffee products sold under the Folgers and Dunkin’ Donuts brand names by about 9%. The company had last altered the price on its coffee in February 2013, when it lowered retail prices on Folgers and Dunkin’ Donuts brands by an average of 6%. The company’s last price increase came in May 2011.

During Smucker’s second quarter, the company reported an 18% drop in volume for its U.S. retail coffee business as shoppers delayed purchases of traditional ground coffee or switched to private label products in response to the higher prices.

“While we expect these challenges to persist in the near term, we are optimistic as we look ahead due to several factors,” said Vince Byrd, president and chief operating officer, during a Nov. 19 call with financial analysts to discuss second-quarter performance. “We are beginning to see competitive price gaps narrow. We anticipate the market will ultimately adjust to higher prices. Our price-to-cost relationship for everyday shelf pricing is consistent with historical norms. We are tactically adjusting all of our levers, including price.”

Keurig Green Mountain, Waterbury, Vt., earlier this year also announced a price increase of up to 9% on all portion packs for use in its brewing systems, as well as on traditional bagged, fractional packs and bulk coffee. The company cited higher costs for green coffee and cocoa, packaging materials, energy and transportation. Green coffee prices alone had risen approximately 55% over the past year, Keurig said.
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