By Janet H. Cho

Pumpkin spice season has just begun, but coffee drinkers may be feeling an unexpected jolt at the cash register.

Mark Smucker, the fifth-generation CEO of J.M. Smucker, confirmed that coffee prices are heading higher. The Orrville, Ohio-based maker of Dunkin', Folgers, and Café Bustelo coffee was forced to raise prices for the second time this year in August, and that increase is showing up on grocery shelves.

Droughts and other climate events in major coffee growing regions such as Brazil and Vietnam had already pushed prices of the commodity higher in the past few years -- reaching a new record this year. But the Trump administration's tariffs on imports from those countries are adding to the pricing pressure.

Retail coffee prices jumped 14.5% in July from the previous year, to a high of $8.41 a pound, according to the Bureau of Labor Statistics. That's before 50% tariffs on products from Brazil, the source of 33% of U.S. coffee beans, kicked in. Coffee importers also face higher tariff rates on products from Vietnam (20%), Colombia (10%), Indonesia (19%), Central America (10%-15%), and Africa (10% to 15%).

Kraft Heinz, whose brands include Maxwell House, Gevalia Kaffe, and IHOP Coffee, said last month that it also increased prices by 0.7 percentage points in the second quarter compared with the year-ago quarter, mostly to "mitigate higher input costs, primarily in coffee."

A Barron's retailer spot-check of Folgers' Classic Roast ground coffee (25.9 oz.) found that prices had increased to $15.64 this week, from $11.98 per tub in mid-May, at Walmart, one of Smucker's largest retail customers.

Prices had also increased at a Kroger in Michigan, to $16.99 this week from $12.99 in May, and at an Albertsons in Phoenix, to $20.99 this week from $15.99 in May.

Smucker's retail coffee sales rose 15% in the fiscal first quarter -- including a 36% increase in sales of Café Bustelo -- but retail coffee profit dropped 22%, primarily because of higher commodity costs, the company said.

J.M. Smucker expects net sales to increase 3% to 5% this fiscal year, from 2% to 4% previously, but said the increase will be offset by "what we anticipate will be a higher impact from U.S. tariffs." It estimates tariffs will shave about 50 cents off of full-year net sales guidance. It previously estimated a hit of 25 cents a share. Smucker currently estimates full-year adjusted EPS of $8.50 to $9.50.

Smucker the CEO told analysts this week that they are trying to mitigate cost increases "through a combination of alternative sourcing strategies, supply chain optimization, and responsible pricing."

The issue is percolating on Capitol Hill. Rep. Ro Khanna (D., Calif.) said he plans to introduce legislation to repeal tariffs on coffee when Congress returns from recess next month.

"These tariffs on Brazil, Vietnam, Indonesia, & Columbia are a 15-20% tax on Americans at the start of their day," he said on social media. "Anyone who has a coffee cup always in hand hates this tax!"

Khanna points out that Richard Nixon's tariffs in 1971 exempted coffee. "A tax on coffee? We don't produce 99% of it here. It's simply hurting American consumers."

Dominic Caruso, president and CEO of Caruso's Coffee Roasters, a private-label coffee roaster in Brecksville, Ohio, that sells to grocery stores, coffee shops, and restaurants, told Barron's that coffee as a commodity has been battered by high prices, volatility, and supply-chain issues over the past five years.

"Now you throw in tariffs, and you've made a bad situation terrible," Caruso said.

He recently canceled an incoming order from growers in Brazil and increased his imports of Peruvian coffee beans, which are subject to a 10% tariff.

"A lot of roasters are still roasting coffee that they bought earlier," Caruso added, meaning that consumers might see higher prices in coming weeks as more-recent increases are passed along.

J.M. Smucker remains optimistic. It expects coffee buying to remain resilient despite inflation, "given consumers' love of daily coffee rituals and continued strength in at-home consumption," noting that about "70% of all coffee-drinking occasions continue to be at home," the CEO said.

Write to Janet H. Cho at janet.cho@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

August 31, 2025 03:00 ET (07:00 GMT)

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