Coffee prices set to rise

Coffee prices set to rise

If you get your coffee at the store rather than through the drive-thru, the price of a cup may have just gone up. Smucker, the company which owns popular brands such as Folgers, Café Bustelo and owns the rights to sell Dunkin’ Donuts branded coffee in grocery stores recently announced plans to raise prices across the board by an average of six percent.

Smucker blamed price increases for raw materials – namely green coffee – for the increase. The statement did say the company had no plans to raise the prices of its K-Cup pods. All things considered, the increase is not too bad, seeing as how coffee prices overall have gone up about 30 percent, making it tougher for companies like Smucker to make a profit selling coffee.

But too big a price increase could cost them customers. Smucker and other companies have learned this the hard way in the past. Back in 2014, the company raised their prices roughly ten percent. When coffee prices went up, so did the price tag on the shelves at grocery stores. Too much, in this cases. Consumption dropped, and Smucker was forced to amount they raised prices far too aggressively. The following year, they dropped prices back down as a result.

This time around, Smucker raised the price but kept the increase well under double digits, so it’s likely most consumers will barely notice the jump.

Some coffee lovers were dismayed to hear the news, worried that their daily Dunkin’ fix would take more out of their pocket. However, prices at Dunkin’ stores should not be affected by these changes.

Many market watchers are now wondering what Smucker’s chief competitors will do. Back in 2014, Kraft, which owns Maxwell House and Gevalia, also increased their prices … only to drop them again the following year shortly after Smucker did … learning the same lesson about drastic increases.

So, will this change be seen as a green light for Kraft to raise their prices too? That hasn’t happened yet, but market watchers expect it might. While these companies want to compete on cost, they don’t necessarily want to leave any money on the table, especially when their supply costs are continuing to increase.

And, while Dunkin’ stores may not be raising their prices right now … at least not yet … they did raise their prices last year. Rival Starbucks has also done so many times in recent years. These increases though, were blamed on the price of labor going up, rather than on the price of beans. But, will the extra cost for supplies mean even more of an increase? Inquiring minds among the coffee drinking public want to know.

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