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Smucker slashes coffee prices, seeing no 'significant' market recovery

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JM Smucker Company, a major US coffee retailer, will drop prices for its flagship packaged coffee products by 6%, thanks to falling commodity coffee prices.

The move to cut retail prices further, following a trim last year, signals that the company does not expect any significant recovery in coffee prices.

"For the last several quarters, lower green coffee costs were reflected in promotional pricing for the majority of our packaged coffee products, and we do not anticipate those prices changing significantly," said Steve Oakland, president of the Smucker US food and beverage segment.

Dunkin' Donuts, Folgers cut

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.

Prices for these products will drop by an average of 6%.

Smucker's K-Cup products, coffee pre-packaged in single-serving pods for use in coffee machines, which claim a rapidly growing market share in the US, will not be included in the price cut.

Coffee sold in Dunkin' Donuts restaurants, which is the second-ranked in US coffee-shop sales, after Starbucks, will also not be affected by the cut.

Falling commodity prices

The cut follows on from a 6% cut in Smucker's retail coffee pricing in July last year.

Last July also saw Kraft Heinz cut prices for its Maxwell House brand by 5.8%.

Front-month arabica coffee prices on the New York futures markets are currently trading at 122.00 cents a pound, largely unchanged from July last year.

But prices are down nearly 50% from their recent peak in October 2014.

By William Clarke

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