By Paul Ziobro 
 

Kraft Foods Group Inc. (KRFT) is cutting prices 6% on Gevalia coffee sold at supermarkets and other retailers due to the drop in green coffee costs, following a similar move by Starbucks Corp. (SBUX).

Kraft's price cut goes into effect May 5, a few days before Starbucks plans to initiate a price decrease that averages 10% for its namesake and Seattle's Best coffees sold at retailers. Starbucks last month announced plans to cut prices, which go into effect May 10.

The lower prices on Gevalia at retail come as Kraft is taking direct aim at Starbucks in its recent advertising campaign, where it claims that more consumers prefer Gevalia's House Blend over Starbucks House Blend. Kraft is using the ad to try to make up ground in the premium coffee segment, which is growing faster than mainstream brands.

The price declines on the higher-priced bagged coffees offered by Starbucks and Kraft come after Kraft--which also owns Maxwell House, and J.M. Smucker Co. (SJM), owner of Folgers--cut prices 6% on those brand and other mainstream coffees.

The coffee makers are responding to a sustained drop in the price of green, or unroasted, coffee.

A Kraft spokesman said in an emailed statement that the price cuts on Gevalia don't apply to single-serve cups compatible with Green Mountain Coffee Roasters Inc.'s (GMCR) Keurig machines, discs used with Kraft's Tassimo machines or on products sold through its online store.

News of Kraft's plans to cut Gevalia prices were earlier reported by Reuters.

Shares of Kraft, which late Thursday reported better-than-expected first-quarter earnings, rose 6.3% in recent trading to $53.72.

Write to Paul Ziobro at paul.ziobro@dowjones.com

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