- Smucker’s will hike coffee prices for the fourth time in a year after posting a $729m quarterly loss
- Retailers are pushing back: JDE Peet’s brands have been delisted in parts of Europe
- Roast-and-ground coffee consumption in North America and Europe fell 3.8% last year while prices climbed 4.6%
IN a familiar refrain, The J.M. Smucker Company – the parent of Folgers, Dunkin’ at Home and Café Bustelo – is preparing yet another round of retail coffee price increases this August, following earlier hikes in May, and June and October last year.
This marks the fourth price bump within 12 months, as Smucker’s grapples with both record-high green-coffee costs and a 10 percent US tariff on raw beans.
Commodity-wise, arabica futures have at least doubled since late 2023 – currently hovering around $4 per pound – driven by droughts in Brazil and storms in Vietnam.
Smucker’s, buying around 500 m lb yearly, saw net coffee sales rise 11 percent in Q4 FY2025, though volume remained flat – showing that higher prices alone powered sales growth. Yet the cost squeeze shows in its bottom line: Q4 FY2025 logged a $729 million net loss, a far cry from the $245 million profit the previous year.
Meanwhile, European roasters are meeting resistance. JDE Peet’s, owner of Jacobs and Douwe Egberts, has faced supermarket pushback across Germany, France, Belgium and the Netherlands – some chains even de‑listed their brands during negotiations.
While some supermarkets have relented, others cite hikes “three, four, five times greater than coffee-price rise.” Temporary shortages have followed, before restocking at higher consumer prices.
These moves signal an industry-wide pattern: suppliers passing inflation, tariffs and climate-driven bean shortages to consumers in order to keep profit margins intact. But sooner or later, retailers and shoppers will push back or shift to private-label alternatives. Smucker’s hopes a diversified portfolio – from value to premium – can withstand elasticity shocks.
Still, Bernstein analysts worry that demand won’t follow historic patterns if prices keep climbing.
“We’re getting close to a breaking point,” says Brian Numainville, Principal of The Feedback Group. “With Smucker’s planning yet another price hike in August – its fourth in just a year – we’re starting to see real signs of price fatigue.”
“Volumes have already flattened, and even Smucker’s own guidance hints at expected volume declines. Once you begin to see consumers actively trading down or retailers pushing back – as they have with JDE Peet’s in Europe – you’re clearly approaching the limits of what the market will tolerate. Continued hikes risk not just short-term backlash, but long-term erosion of brand equity.”
When prices bite back: Lessons from the past
The coffee saga is emblematic of a broader economic truth: anything consumers buy often reacts when prices rise enough to hurt. Historically, sectors have faced this test.
“When you look at other industries that have gone through sharp price escalations – oil, soda, even meat – you start to see a familiar pattern,” says Brian.
“Initially, consumers absorb the increases,” says Brian. “But as prices stay high or keep climbing, they adjust: buying less, switching to cheaper alternatives, or stop buying.”
“Retailers also start resisting shelf price inflation, especially when private label options are available. The key warning signs are flat or declining volumes despite higher prices, consumer sentiment turning negative, and public discourse around fairness or value – which are all now emerging in the coffee space.”
When some cities imposed soda taxes in the 2010s – Philadelphia, taxed at 1.5 cents/ounce in 2017 – some consumers shifted to cheaper drinks, smaller sizes or avoided sugary beverages altogether. A study in Mexico revealed that taxes and higher prices did little to deter consumption of sugary drinks. Soda giants either absorbed costs or re-engineered sizes and packaging to preserve volume, with companies actually making more money by selling less soda.
In 2022 the US baby formula shortage, caused by supply disruptions and an FDA investigation scandal, led to price spikes and rocketed demand for generic versions. Retailers rationed, and consumers turned to store brands – leading big brands to scramble for regained shelf presence.
Eggs are another example that have been making headlines lately. A recent study shows that about a third of Americans have stopped buying eggs due to rising costs, and won’t buy again until costs lower to $5 a carton.
Coffee itself has always been a volatile sector. The 1970s coffee price crisis led to Nestlé using chicory for its coffee blends at the time. Some argue that this price hike also led to a consumer pivot from coffee to soda beverages as a cheaper alternative.
In 2025, Reuters reports roast-and-ground consumption in North America and Europe dropped 3.8% last year amid a 4.6 percent price hike; steeper hikes risk deeper declines. ABIC President Pavel Cardoso told Reuters that in Brazil, consumers are changing their habits, rationing and cutting waste.
In each, there’s a familiar arc: cost shock, price hikes, initial pass-through, consumer resistance, supplier adaptation or retreat. Retailers often resist by delisting or substituting. Consumers pivot to private-labels or alternate experiences – coffee shops vs. home brew, for example – a shift suggested even at Smucker’s, where at-home remains 70% of occasions.
This indicates coffee may not be immune. If prices remain elevated, expect a proliferation of cheaper blends, smaller pack sizes, or outright brand abandonment.
What comes next?
So what lies ahead for coffee prices, consumer behaviour and retail strategies?
Arabica futures may retreat if Brazil’s next harvest rebounds, but structural climate threats persist. Tariffs, too, remain a wild card; further US duties on Vietnam could potentially follow . Suppliers will likely continue passing along at least some costs. Smucker’s forecasts 2–4% sales growth in FY2026, driven largely by pricing, but volumes may slip if elasticity deviates from norms.
Consumers may also pivot patterns. Already, private-label coffee is capturing share. A recent U.S. study shows that over the past four years, annual private brand dollar sales rose nearly a quarter. Since 2021, store brand unit sales have risen by more than 2%, while national brands have fallen by nearly 7%.
With steep cost hikes – hardly obscure – the trend could accelerate. Consumers might downgrade from ground to instant, shift from premium roasts to supermarket blends, or trade off frequency – making mugs instead of pots, for example.
Retailers will revise their strategies in response. Supermarkets have two levers: absorb margin to keep shelf price stable, or force suppliers to adjust. Some retailers have already de-listed JDE brands in protest. We may expect more aggressive shelf playlists favouring private-label.
“I believe private-label coffee is poised to keep gaining ground,” says Brian. “With consumers trading down and viewing at-home coffee as a more budget-conscious choice, private labels offer a compelling value proposition, just like they do in many categories.”
“I’ve seen many retailers double down on their own brands, even enhancing quality and storytelling to better compete with national brands. While some consumers may eventually return to premium brands if prices stabilise, the longer this volatility lasts, the more permanent the switch to private labels may become.”
So – how far can coffee prices go? Not far enough that consumers stop drinking, but when prices rise too high, volumes drop, brand loyalty erodes, and private-label thrives.
Retailers may bias towards stability or margins over supply partners. Suppliers will be forced to innovate, hedge and diversify. The coffee industry may not face an existential threat, but rather a pivot point: premiumisation for some, commoditisation for many.
Coffee Intelligence
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