UPDATE 2-Kraft follows Smucker and cuts coffee prices

* Price move follows trendsetter Smucker's decrease

* List prices dropped for Maxwell House, Yuban brands

* Kraft shares climb up a shade

(Updates prices; adds byline, FACTBOX link, details)

By Marcy Nicholson

NEW YORK, Aug 23 (Reuters) - Kraft Foods Inc (KFT.N)
dropped the list price of its flagship coffee brand Maxwell
House in the United States by roughly 6 percent, effective Aug.
22, a spokeswoman said on Tuesday, following rival and
trendsetter J M Smucker Co's (SJM.N) lead.

Smucker, the top U.S. packaged coffee maker, cut its coffee
prices by the same amount on Aug. 16 for most of its brands,
including its flagship Folgers as well as Dunkin' Donuts
branded coffee that it is licensed to sell. It was the first
major roaster to do so after 15 months of price increases
within the industry, and the move was seen as putting pressure
on its rivals to follow suit.
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FACTBOX on recent coffee price history [ID:nN1E77F0I1]
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Kraft's net decrease includes its flagship brand Maxwell
House as well as Yuban, and equates to 20 cents per lb
equivalent on roast and ground coffees, and 2 cents per ounce
on instant coffees, Kraft spokeswoman Bridget MacConnell said
in an email.

Gevalia, the Maxwell House International line of specialty
soluble beverages and the Tassimo line of coffees are not
included in this price change.

Arabica coffee futures KCc2 trading on ICE soared to a
34-year high in May at $3.0890 per lb, more than doubling
during the steady 11-month rally. Prices surged on a
combination of tight supplies of washed arabica beans and
speculative buying.

The market since dropped around 20 percent, with the
December contract up 0.9 percent at $2.7080 per lb at 12:28
a.m. EDT (1628 GMT).

"We evaluate the various market factors and make our
pricing decisions when it's appropriate for the business,"
MacConnell said, when asked the reason for the price decrease.

Both Smucker and Kraft raised their list prices for coffee
four times between May 2010 and May 2011, with Smucker's
increase for shoppers during this time reaching a total of
approximately 38 percent. For Kraft, the total increase was
roughly 56 percent.

Roasters across the board, such as Starbucks (SBUX.O),
Green Mountain Coffee (GMCR.O) and Nestle's (NESN.VX) premium
portioned coffee brand Nespresso, passed along the rising costs
of beans to shoppers over a 15-month period.

One veteran coffee dealer in New York viewed Kraft's price
decrease an effort to get more market share after Smucker,
whose coffee is viewed as a similar quality and are both sold
in grocery stores.

"Someone sees the same product, one is cheaper than the
other, someone will buy it," the dealer said.

Shares of Smucker were up 0.8 percent at $68.33 by 12:23
p.m. EDT and Kraft shares were up 0.2 percent at $33.61.
(Editing by Andrea Evans)