June 9, 2016 / 6:20 PM / 3 years ago

Folgers coffee maker says ample supplies allow quick price changes

NEW YORK (Reuters) - J.M. Smucker Co, the biggest U.S. coffee roaster, has ample bean supplies that allow it the freedom to change retail prices if necessary, the company said on Thursday, weeks after its first price cut in 10 months.

Strong inventories would enable the maker of Folgers coffee to lower prices to gain market share or quickly respond to any commodity price changes.

“Not only do we have good coverage but we have the ability to move price should we need to,” Steve Oakland, president of Smucker’s U.S. Food and Beverage unit, told analysts on a conference call after the company released its fourth-quarter results.

“There’s going to be a great arabica crop this year so we think coffee will trade in a price range where we are priced. Robusta may be a bit tight.”

Last month, the company cut prices for its flagship Folgers and Dunkin’ Donuts coffees by 6 percent. This followed a decrease 10 months earlier, when futures prices were almost the same, causing analysts to see the move as an effort to fend off growing competition from private label coffees.

Typically competitors follow suit to maintain market share, but Maxwell House-maker Kraft Heinz Co has yet to announce a reduction.

Smucker’s quarterly net sales jumped 25 percent, beating analysts’ estimates, as demand rose for its Folgers and Dunkin’ Donuts branded coffee and its pet foods.

President and Chief Executive Mark Smucker said the company had major plans for its K-cups, pods that contain roast and ground coffee for a single cup prepared in a specific brewer.

“This year, we will invest further in the product line to improve trends, including lower pricing and new packaging that will leverage the iconic Folgers red can brand equity,” he said.

Reporting by Marcy Nicholson; Editing by Richard Chang

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