NEW YORK — J.M. Smucker Co. is cutting prices on Folgers and Dunkin Donuts bagged coffee, electing to use the recent pullback in green coffee prices to chase market share rather than pad margins.
In a surprise move Tuesday, the company said it cut coffee prices on its brands by an average of 6 percent, a move coming after a year in which the company raised prices a total of 23 percent because of rapidly rising costs.
“If (Smucker) is making this move, it’s not on speculation,” said a commercial coffee trader. “It means that they’re well covered, and even with the 6 percent decrease, it might squeeze their margins, (but) they feel like they’re going to make it up with a pickup in the competition.”
Starbucks chief executive Howard Schultz, speaking on CNBC Tuesday, said the coffee giant has locked in its coffee inventory for all of 2012, a long buying period that ensures stability but doesn’t benefit as much when costs fall. Dow Jones Newswires
