J.M Smucker’s coffee just got cheaper

J.M Smucker, who oversees Folgers, Dunkin’ Donuts, Millstone and a number of other coffee-related brands, have announced that they’re going to be cutting the price of a cup of joe in their stores by about 6%.

You hear that? That’s the sound of America rushing out to grab a coffee!

Wholesale coffee prices have tumbled in recent months, with some like-for-like shipments coming in nearly 45% lower than they were at the turn of the year. The reason for those originally high prices was the prolonged drought in Brazil and other key coffee growing nations, which limited supply.

You may remember that at one point last year things got so crazy that Starbucks took a step backwards and refused to buy coffee on the markets until things calmed down. It was around this time that a host of companies – Smucker included – raised their prices to maintain a steady level of profit.

Now that market prices have stabilised and regressed to a more ‘normal’ level, J.M Smucker have dropped the price of a cup of coffee. Could other companies follow suit?

Some analysts believe so.

ABN Ambro believes that future costs could come fall to $1.15 a pound by the end of the calendar year.

This prediction is based on the publication of a few reports from the United States government which predicted that Brazilian harvest levels will return to pre-drought levels.

With market prices tumbling, it’s expected that their rivals could also bring down the cost of a cup of coffee.

“We would expect Kraft to follow this price decrease quickly, at least on its Maxwell House brands,” commented Christopher Growe, an analyst for Stifel.

But some people believe that J.M Smucker’s move hasn’t been fuelled by generosity. Instead, some people think that the company are making a purposeful effort to ensure that Dunkin’ Donuts can compete with and beat McCafe products in terms of price point. The McDonald’s range of breakfast items is one of the biggest ‘direct competitive threats’ to the Dunkin’ Donuts brands.

Whatever the reason for the business decision, we doubt that the general population will mind. Cheaper coffee for everyone!