J.M. Smucker Boosts Prices On Most Coffee Products By 9%

Tyler Durden's picture

It took the Fed long enough but finally even it succumbed to the reality of surging food prices when, as we reported previously, it hiked cafeteria prices at ground zero: the cafeteria of the Chicago Fed, stating that "prices continue to rise between 3% and 33%." So with input costs rising across the board not just for the Fed, but certainly for food manufacturers everywhere, it was only a matter of time before the latter also oo threw in the towel and followed in the Fed's footsteps. Which is what happened earlier today when J.M. Smucker Co. said it raised the prices on most of its coffee products by an average of 9% to reflect higher green-coffee costs.

WSJ reports that the price increases primarily impact Folgers and Dunkin' Donuts brand products and exclude products made for single-serve coffee machines. But don't blame it on monetary policy: it's all the weather's fault:

Coffee prices have been elevated amid concerns that unusually hot and dry weather in Brazil's key growing regions will dent coffee-bean output.


Smucker, whose U.S. consumer-foods business includes its namesake fruit spreads and Jif peanut butter, plans to provide more details when its releases its fiscal fourth-quarter financial report on Thursday.

Why wait so long with the price hike? "The company in February had cut its full-year sales and earnings guidance, citing a more competitive pricing environment and lower expectations for sales volume... In the fiscal third quarter, Smucker's U.S. coffee business posted a 2% volume increase, but lower prices helped weigh on sales, which were down 8% in the quarter. The segment's profit, however, grew 4% on lower coffee costs, marketing expenses and manufacturing overhead."

In other words, it could wait no longer, since volumes did not make up for the loss in sales.

And now time for the old bait and switch: boost prices by 9% and at the same time reduce package sizes by 9% in effect lowering the price! So far it has worked with fooling most of the people all of the time. Will it work this time too?

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ParkAveFlasher's picture

Addiction is assymetrically expensive.  See oil.

nope-1004's picture

Well at least they didn't make the packaging smaller and charge the same price. That type of inflation is far worse.

Or maybe this is because we are getting more "sophisticated" with our diets?



duo's picture

Too bad that swill is made from robusta beans from Vietnam.  The whole "bad weather in Coloumbia" meme is just an excuse to raise prices that will never go back down when there is a coffee glut a year from now.

Sudden Debt's picture

Now Starbucks will need to at least charge about 60 dollars and 5 cents for a normal coffee just to break even...

5 cents for the coffee...



sleigher's picture

That's because they put everything behind the counter.  5 people bumping into each other to fill a cup with fluid is not a good model of efficiency.  just sayin...  I used to work in a coffee shop a long time ago and they (Starbucks) do it all wrong.

jackstraw001's picture

Starbucks needs a separate line for people who have their shit together.

COSMOS's picture

These rising prices and the tight squeeze on income have got to start hitting their customer base at some point in time.  Won't be too long before they start shuttering stores and more people are out of work.  Lots of money out there to inflate the prices of goods but that money never makes its way into salaries fast enough, its too busy being used by the ones closest to the tap to buy up companies and buy off politicians.

philipat's picture

Infaltion? No, there is no inflation, other than the essentials such as food and energy. I wonder how lomg the sheeple will continue to accept this BS?

yrad's picture

I went to the grocery store this week here in Texas and 1 pound of ground beef was $8.65. I almost fell over. I remember when ground beef was a cheap way to make a fast meal. Thank you, Fed!!

XitSam's picture

Economists say you'll just switch to a cheaper cut of soy "meat" to compensate. Even Steven.

Miffed Microbiologist's picture

Well the fed is working on finding a viable way to print meat. However, I myself would not eat their presented product. I'm sure they would not either. Im guessing it would resemble that "sausage" like hamburger " product seen in stores. You know the one. Sourced from the leavings of 100 cows and shaped like an E.coli.


duo's picture

I think Taco Bell has perfected printed meat.  It's the vegetabel protein stuff in their "beefy" tacos and burritos.

Dr. Engali's picture

They have already shrunk the portion size and  can no longer hide the inflation with smaller packaging. 

davinci7_gis's picture

You beat me to it Dr....the amount of corn flakes and potato chips I get in a package has been dwindling down every year since 2008!  

piceridu's picture

Dude you should think of that as a blessing in disguise...potato chips and Monsanto corn flakes? ... how about some real food.

PTR's picture

Wait- you get more than ONE inside your package?  When I go to the store the packaging just says "Potato Chip."

Sudden Debt's picture

nono, it was hot and dry in Brazil!

CrazyCooter's picture

You know, your comment got me thinking. See, the .gov likes to adjust stuff for the season, to account for typical hot/dry/wet/cold weather and what not, right?

But if the season is atypical, then perhaps another adjustment, sort of like a second derivative, might be just the trick.

Then, each season, we can seasonally seasonally adjust our economic data so people have more information to make informed decisions about investing, purchsasing, budgeting, and so on.

And I bet that opens up a whole new market for trading said seasonal seasonal dervatives too!




SPOILER: It's turtles all the way down ...

hidingfromhelis's picture

If that doesn't work, the news can always be adjusted.  Can you imagine it ever coming to that?  /s

The Merovingian's picture

Amen Doc.  Sadly, as we all know, .gov says this doesn't count as 'real' inflation because it isn't imaginary like the stuff they 'officially' call inflation ...

Hmmm, why do I suddenly feel a wave of nausea coming over me?

SMG's picture

Jannet Yellen waves hand..."This isn't the inflation you're looking for."

Beam Me Up Scotty's picture

I can't wait until they raise my chocolate ration from 30 grams to 20 grams!!

youngman's picture

In Colombia here they have increased exports about 40%....we had a good crop...so they say

FieldingMellish's picture

exports? Columbia? Coffee... right....

PTR's picture

Does reselling Venezuelan goods count towards that?

oklaboy's picture

let the fall begin

dontgoforit's picture

One bean for old times sake?

NOTW777's picture

while coffee falls from 2.20 to 1.72;  they never lower prices

eurogold's picture

At any price, it's all crap ! They blend in more of the cheap stuff "robusto" and reduce the amout of the good stuff "Arabica" beans ! But who's counting anyway ?

orangegeek's picture

And J.M. Smucker now gets to hang onto more of their inventory.


This, as we all know, is great for sales out and profitability.



Government needs you to pay taxes's picture

I'm compiling a list of basic foodstuff price inflation for H1 2014.  Meat (chicken breast, hamburger) in my area is up 15% YoY.

Bread is up 5%.

Frozen pizzas are up 10%.

Now coffee is going up 9%.

In other important expense areas, my healthcare insurance went up 17%, and gasoline is up about 15% as well.

Won't be long before our criminal President blames the price increases on global warming, and executive orders a carbon tax.

Dr. Richard Head's picture

So the Fed's targeting isn't working?  At least Paul Krugman will be happy that we are seeing prices rise in food, good for GRP growth and aggregate demand and all of that jazz.

'jazz hands'

Government needs you to pay taxes's picture

Sure will have a favorable knock-on impact on gross tax receipts.  No nevermind about killing demand for basic consumer discretionaries.  The luxury sgment, on the other hand, is doing just fine.  Look @ the fine wine and art auctions @ Sotheby's and Christie's.

What a shitstorm we're heading into.

youngman's picture

With Obamas new EPA regs coming on line...yours and the companies that make that food you eat energy bills are going up 30 to 40%...that will be passed thru soon...

XitSam's picture

Badthink:  A carbon tax will only make things more expensive.

Goodthink:  Obama taxes us because he cares about our well being!

PTR's picture

Won't be long before our criminal President blames the price increases on global warming, and executive orders a carbon tax.

The proper nomenclature is "climate change." A term to fit all scenarios.  

XitSam's picture

Actually, the current approved phrase is "climate disruption."

We have always been at war with EastAsia.

Flakmeister's picture

Anthropogenic Global Warming is the correct and proper description of the phenomenon....

COSMOS's picture

I thought they more than doubled the money supply with their printing, I would expect the prices to at least go up by 50% in the next few years.

ejmoosa's picture

it's my understanding that coffee is a crop that responds quickly to supply and demand changes.  So these price increases are not likely due to deman, but inflation pure and simple.

disabledvet's picture

Phucking Jews and all their god damn Jew cronies.

Blame Bo! Yeah!

Let's see how many more "deserters" we get when they're all dead.

kito's picture

DA whats up with you. some of those agent orange side effects popping up again?

NotApplicable's picture

I think he's got a red line in the sand.

Folgers Red.