Smucker licenses Dunkin’ Donuts brand coffees, which was included in both price cuts. In Jul 2015, Smucker had lowered its packaged coffee prices of the majority of its products sold in the U.S.by 6%.
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Most of the effect of pricing cut will be seen in the Folgers brand, as well as packaged coffee sold under the Dunkin’ Donuts brand name. However, the price decrease does not affect K-cup pods.
This year from the North Country to the Southern Tier and all points in between, when you purchase an iced coffee at Dunkin’ Donuts there will be multiple non-profits getting some help.
The biggest USA roaster said on Tuesday it would cut prices by 6 percent, adding to a similar cut in July a year ago. “These include launching a number of on-trend products such as Dunkin’ Donuts, K-Cup pods, providing consumers lower pricing on Folgers roast. and delivering on our cost savings and working capital initiatives”.
In January, Arabica coffee futures slid to two-year low and Robusta coffee futures declined to their lowest in 5-1/2 years. But cutting prices to win customers when benchmark coffee costs have barely changed suggests the industry is prepared to take potentially riskier steps to boost sales.
Smucker’s profitability largely depends on the price of green coffee. That means there has been a sustained decline in green coffee costs since July. Coffee prices are highly volatile and are affected by weather and pest infestation.
Nevertheless, this Zacks Rank #2 (Buy) company experienced favorable volumes in the third quarter of fiscal 2016, driven by the cut in coffee prices in July.
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Coffee sold in Dunkin’ Donuts restaurants, which is the second-ranked in USA coffee-shop sales, after Starbucks, will also not be affected by the cut. Today, you can download 7 Best Stocks for the Next 30 Days.
