J.M. Smucker Rolls Back Coffee Price Hikes After Tariffs Eased – CoffeeTalk

J.M. Smucker increased coffee prices earlier this year due to imposed tariffs on imported green coffee beans, which are primarily sourced from Brazil and Vietnam and are not cultivated domestically. Despite anticipated declines in demand due to these price increases, the company reported that consumer demand remained stronger than expected, projecting a 16% year-over-year increase in coffee revenue for the fiscal year ending in late April. This is accompanied by an anticipated 6% reduction in volume, reflecting smaller drops compared to initial forecasts.

The company annually purchases about 500 million pounds of unroasted coffee beans, facing tariffs of 50% and 20% on Brazilian and Vietnamese imports, respectively. In an executive order issued in November, President Trump designated coffee as a tariff-exempt agricultural product, which could impact future pricing strategies.

Additionally, other coffee importers have followed suit in raising prices to manage the increased sourcing costs, with the Consumer Price Index for September noting an increase of 18.9% for roasted coffee and 21.7% for instant coffee year over year.

J.M. Smucker has opted not to raise coffee prices again this fiscal year, leading to unrecovered tariff costs that will negatively affect earnings. The company estimated that these unrecovered costs could reduce earnings per share by $0.50 for the current fiscal year; however, Mr. Marshall indicated a more favorable outlook for the following year, suggesting that the impact of tariff costs would lessen, assuming no changes to U.S. trade policies regarding green coffee.

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