Supermarket prices for coffee brands are set to increase further this year, contributing to further food inflation for consumers, says a well-known food manufacturer J.M. Smucker.
Prices for an array of the company’s brands, including Folgers, Café Bustelo, and Dunkin’, will be particularly affected, according to forecasts by the company.
The reason, the company says, is the higher price of Robusta coffee beans, which have soared by over 50 percent so far this year alone on the futures market.
Weather conditions, including drought in key Robusta-growing parts of the world like Brazil and Vietnam, have played a fundamental role in sending the prices skyrocketing.
The company’s CEO Mark Smucker recently announced an increase to be applied in early June, which will impact several parts of the company’s coffee portfolio.
“The coffee category continues to experience commodity volatility and overall meaningful inflation,” Mr. Smucker said in a statement to Bloomberg.
Coffee sales for Smucker decreased by 4 percent this year, which the company attributes to lower list prices and decreased commodity costs.
In a statement in the company’s quarterly segment results, Smucker said that the 4 percent decrease in sales amounted to $26.4 million.
“Volume/mix decreased net sales by 2 percentage points, primarily driven by the Folgers® brand, partially offset by increased contributions from the Café Bustelo® and Dunkin’® brands.”
The company is optimistic in its outlook for next year, amid an overall robust performance across all of its segments.
For fiscal year 2025, Smucker expects net sales to increase 9.5 to 10.5 percent.
“Our fourth quarter and full-year results underscore the strength of our business and the demand for our leading brands. Our focus on superior execution and disciplined cost management helped drive our strong results in a dynamic operating environment,” Mr. Smucker said.
“Our transformed portfolio, including the acquisition of Hostess Brands during the fiscal year, has strengthened our business for long-term profitable growth across our key platforms of coffee, Uncrustables frozen sandwiches, dog snacks and cat food, and sweet baked snacks.
“Looking ahead, fiscal year 2025 will be a year of investment in our brands, capabilities, and talented employees, who have been instrumental to our success,” he added.
Meanwhile, coffee price hikes have not just affected Robusta beans, which are mostly used for instant coffee, but also the more highly sought Arabica beans. However, the highest increase was seen in Robusta beans across multiple stock exchanges.
While coffee net sales saw a decline, Smucker nonetheless reported over $200 million in profit, which marked an increase of 5 percent compared with last year.