Smucker Sees Lower Coffee Prices in 2027 as Costs Decrease

A worker packs coffee cherries during a harvest in Jacutinga, Brazil. (Victor Moriyama/Bloomberg)

Packaged food company JM Smucker Co. said it planned to lower coffee prices next year as costs comes down.

Smucker set its 2027 full-year profit outlook above expectations June 9, forecasting adjusted earnings in a range between $9.75 and $10.25. Smucker said it expected net sales to decline next year between 3% and 4% when it reduces prices, as the company passes through lower costs on green coffee to consumers. 

Smucker executives said their forecast for next year was designed to be “prudent,” given the turmoil in the Middle East and the cautiousness in consumer spending. The company said the price cut was designed to be fair to consumers while taking a “measured approach” that supports its financial goals. 

Arabica coffee futures in New York are down nearly 45% from last year’s record high.

In its fourth-quarter earnings, Smucker reported adjusted earnings per share of $2.77, topping the average of analyst estimates. Fourth-quarter revenue also outpaced expectations. The company said its net sales for the quarter benefited from an increase in coffee and sweet baked goods prices and higher demand for Uncrustables sandwiches.

CEO Mark Smucker said the company has seen growth in its Cafe Bustelo coffee brand. The brand “skews toward a very authentic Latin consumer, but a lot of the growth is being driven by millennial and Gen Z non-Hispanic consumers” gravitating toward its retro vibes and “robust coffee taste,” he said. 

Younger consumers, who grew up going to coffee shops, are trying to replicate those beverages at home, “the most affordable way to get your coffee,” Smucker said. 

Smucker, like other packaged food companies, is contending with financially strapped consumers spending carefully as both the cost of food and gas have risen. The company previously raised its prices on coffee several times after tariffs caused the cost of coffee beans to surge. Smucker has said the company is working on cutting costs and stabilizing the Hostess brand, which it acquired in 2023. 

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“We always consider the makeup of our portfolio,” the Smucker CEO said on a call with analysts June 9 when asked about the possibility of divesting Hostess. “Our focus continues to be stabilizing that business and improving profitability.”

Smucker said in a statement that it was navigating “geopolitical, macroeconomic, and policy changes, as well as changes in consumer behaviors.”

Excluding coffee and tariffs, the company said it does expect costs to rise in the low-single digits next year. Smucker is pursuing tariff refunds, but “the scope and realization remains uncertain,” Chief Financial Officer Tucker Marshall said on the call.

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In the fourth quarter, U.S. retail coffee net sales increased 12%, compared with the prior year, lifted by higher prices. Sales volume decreased for the Dunkin and Folgers brands, but increased for the Cafe Bustelo brand, the company said. 

Dunkin ranks No. 17 on the Transport Topics sector list of the top food service carriers.

In late February, Smucker said two new directors were joining its board as part of an agreement reached with activist investor Elliott Investment Management. 

The Smucker CEO said the agreement “allows us to engage with them on a quarterly basis for a finite period of time,” including a discussion last week.