February 8, 2011 / 4:27 PM / 8 years ago

Smucker's hikes Folgers price as coffee rallies

NEW YORK (Reuters) - J.M. Smucker Co (SJM.N), the top U.S. packaged coffee maker, raised prices for most of its coffee products, including Folgers, in a widely expected move as the cost of beans has soared 85 percent in eight months.

Although this was the third price rise in less than a year — by a company known as the trendsetter in coffee list prices — many in the coffee industry have wondered how the company managed to wait so long as tight supplies of washed arabica coffee beans have continued to fuel the price rally.

The company, which is also a Dunkin’ Donuts licensee, said Tuesday it raised prices by an average of 10 percent for the majority of its coffee products after a spike in green coffee costs. Smucker’s acquired the vast Folgers brand in November 2008.

This is the company’s biggest price increase over the past year, after it raised its prices in August by about 9 percent, which was then the largest widespread rise in years, and in May by about 4 percent.

Arabica coffee futures have surged 85 percent since June, reaching $2.5360 per lb last week, the highest level in 13-1/2 years.

(Graphic on coffee and Smucker's share prices: here)

Over the past few months, the high prices have hurt results at coffee companies, including Starbucks Corp (SBUX.O), the world’s largest coffee chain.

Smucker’s, which competes with Kraft’s KFT.N Maxwell House and Yuban brands, had warned in November that rising coffee costs may hurt its fourth-quarter profit and said it might have to raise prices.

Kraft, which typically does not raise its coffee prices until a change has been made to the trendsetting price of Folgers, could no longer hold back and raised its prices in December. On December 15, Kraft raised the price of its roast and ground Maxwell House and Yuban coffees by about 12 percent.

A Kraft spokeswoman did not have any comment on prices following Smucker’s price hike. The company typically follows suit within a few days.

Smucker’s shares, which have risen 8 percent since the company announced its May price rise, were up 86 cents at $63.73 on Tuesday on the New York Stock Exchange.

Reporting by Mihir Dalal in Bangalore and Marcy Nicholson in New York; Editing by Walter Bagley

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