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Kraft Cuts U.S. Coffee Prices by 6%, Following J.M. Smucker

02/22/2013 | 12:32pm US/Eastern

NEW YORK--Kraft Foods Group Inc. (>> Kraft Foods Group Inc) cut prices for its Maxwell House and Yuban coffees by about 6%, following a similar move by rival J.M. Smucker Co. (>> The J.M. Smucker Company) 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

(MORE TO FOLLOW) Dow Jones Newswires

02-22-13 1231ET

Stocks mentioned in the article : Kraft Foods Group Inc, The J.M. Smucker Company
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