For the tertiary occasion since June 2024, J.M. Smucker has raised prices on its coffee brands, including Folgers, Café Bustelo, and Dunkin’ At Home. A fourth increase is set for August 2025. These moves aim to offset record-high green coffee bean costs and tariffs, but they’ve also pushed retail coffee sales value up 11% in fiscal Q4 2025. Despite rising prices, sales volumes stayed flat—a sign of inelastic demand in current market trends. Consumers appear willing to pay more for trusted brands, but this tolerance could face pressure if prices climb further.
Higher coffee prices stem from soaring global bean costs and a 10% U.S. tariff on imports, introduced mid-2024. Smucker buys roughly 500 million pounds of green coffee yearly, primarily from Brazil and Vietnam—countries hit hard by tariffs.
Though the company cut marketing spending, commodity inflation still squeezed profit margins. Even with $738.6 million in Q4 coffee sales and $211.2 million in segment profit, margins dipped slightly as costs outpaced price-driven revenue gains. The quarter delivered a staggering $729 million net loss, reversing a $245.1 million profit from the prior-year period.]
Management insists the hikes are part of a long-term growth strategy, betting on brand loyalty to absorb price increases. They’ve highlighted Folgers and Café Bustelo as key brands able to maintain value despite leaner volumes. At-home coffee consumption trends, still strong post-pandemic, offer some insulation against consumer pushback.
Smucker forecasts 2-4% sales growth in fiscal 2026, relying on pricing over volume. Yet flat sales quantities hint at cracks; if prices rise too high, some buyers might walk away. The company faces a tightrope act. Past price hikes haven’t yet dented volumes, suggesting coffee remains essential for many households. But market trends show stirs of softness in certain segments.
Smucker’s plan assumes shoppers will keep paying more for household staples, but there’s a threshold. If inflation or tariffs spike again, or if cheaper alternatives gain traction, today’s growth strategy could spiral into volume declines. For now, price discipline keeps profits afloat—but consumer behavior holds the real power. This comes as Smucker expands its freeze-dried coffee offerings and flavored varieties to capture premium-seeking shoppers, aligning with broader industry shifts toward innovation.
