Kraft (KRFT) has raised coffee prices for brands Maxwell House and Yaban — following suit after JM Smucker did the same.
A spokeswoman for Kraft said increases in the “green-coffee” market were to blame for the price increases.
The cost of arabica coffee has increased some 55% in the past year due to Brazil’s worst drought in more than 50 years ravages the coffee crop. Reuters reported that ICE arabica coffee futures spiked “nearly 90 percent between January and April to the highest level in more than two years at $2.19 per lb. Arabica futures prices have since dropped around 20 percent.”
Wall Street had been banking on cost increases to do the problems Brazil has been facing.
JM Smucker increased its Folger coffee prices by 9% due to bean costs going up, the company said.
Kraft itself is not seeing any real hit to its stock due to the shortage and price surge — KRFT stock is up 1.9% in morning trading.
Prices of all instant coffees are not affected: Maxwell House Filter Packs and Filter Pack Singles, Maxwell House International, all single-serve pods, Gevalia ground and whole bean coffees and Tassimo products.
This is the first price increase for both companies since 2011.