NEW YORK--Kraft Foods Group Inc. (KRFT) cut prices for its
Maxwell House and Yuban coffees by about 6%, following a similar
move by rival J.M. Smucker Co. (SJM) this week.
Both companies cited a decline in prices for green, or
unroasted, coffee as the reason for the price reductions.
Futures of arabica coffee, the world's most cultivated and
consumed variety, have declined almost 30% over the past year, due
to a record harvest from top grower Brazil, the source of about
one-third of the world's coffee.
J.M. Smucker--the maker of Folgers, Dunkin' Donuts and Millstone
coffee--also cut the prices of its packaged coffee products by
6%.
U.S. food companies had raised prices in 2011, when arabica
futures surged above $3 a pound. Futures are now trading around
$1.40 a pound, and Kraft and J.M. Smucker have cut retail coffee
prices as a result.
However, premium coffee prices remain buoyed by increased
consumer demand.
"Contradicting recessionary trends that saw consumers curtail
spending, premium-priced single-cup coffee has led the growth in
the coffee category between 2010 and 2012," market research firm
Mintel said in an October report on the U.S. coffee market.
Kraft's price decreases excluded some of its higher-priced
brands such as Gevalia.
"After lowering the prices on Gevalia roast and ground coffee in
retail outlets by approximately 10% in May of 2012, we feel Gevalia
is currently competitively priced," said Russ Dyer, a Kraft
spokesman, in an e-mail.
Write to Leslie Josephs at leslie.josephs@dowjones.com