Here’s Why Top Food Retailers Are Cutting Coffee Prices

J.M. Smucker Co. (NYSE:SJM) is cutting prices for its Folgers and Dunkin’ Donuts brand coffees by an average of 6% in an attempt to boost sales.

Unroasted coffee beans nearly doubled in price between June 2010 and June 2011, forcing Smucker (NYSE:SJM) to raise their prices by 10% in February and again, by 11%, in May. But the price of coffee beans has since declined, and Smucker will be lowering its prices in order to regain some of its lost revenue.

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Smucker sells its own brand, Folgers, as well as the Dunkin’ Donuts brand, which it sells under a license from Dunkin’ Brands (NASDAQ:DNKN). The price cut will only affect packaged coffee sold in stores, not the coffee sold in Dunkin’ Donuts shops.

The move puts pressure on other coffee makers and retailers to lower prices, especially with food prices high and the economy facing another recession. Kraft Foods (NYSE:KFT), which owns the Maxwell House brand, as well as Starbucks (NASDAQ:SBUX), Peet’s Coffee & Tea (NASDAQ:PEET), Caribou Coffee Co. (NASDAQ:CBOU), and Green Mountain Coffee Roasters (NASDAQ:GMCR) will all have to follow Smucker’s example if they want to remain competitive.

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