Coffee tariffs hit hard for Dunkin' seller J.M. Smucker Co.
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President Trump's tariffs are roasting coffee sellers.
Why it matters: American companies have few domestic options for raw, unroasted coffee beans — known as green coffee — so they can't do much to limit their exposure to import duties.
Driving the news: The J.M. Smucker Co. — which sells Folgers, Dunkin' and Cafe Bustelo coffee brands — is citing coffee as its No. 1 raw material cost.
- Trump's 10% baseline tariffs on nearly all imported goods includes coffee beans. And coffee prices were up 9.6% in April, according to the Consumer Price Index, which reports May prices on Wednesday.
- The extra duties lowered Smucker's profits and will lead to further price increases, the company said Tuesday.
"We are taking pricing across the entire coffee portfolio," Smucker CFO Tucker Marshall said on an earnings call. "Those actions not only cover green coffee commodity inflation, but also support recovering tariffs associated with our green coffee."
Zoom out: At Starbucks, the increased duties are causing the world's largest coffee chain to "look at how the tariffs will impact the cost and then the price that we need to provide to the customer," CEO Brian Niccol told Axios on Tuesday in an interview in Las Vegas, though he added that "we have no plans right now to pass on pricing."
- "Fortunately for us, we have a very diverse way of buying, and then we roast everything in the United States," Niccol said. "So it's really just the green coffee that we're dealing with, which has got that 10% tariff.
Reality check: Coffee tariffs are just one of Smucker's problems: The company's Hostess acquisition isn't yielding much fruit.
- Smucker's sales of sweet baked snacks plunged 14% when excluding divestitures.
- "We believe that the disappointing outlook, particularly the weakness in Hostess's performance, raises even more concern about the acquisition's integration and the need for additional investment to revive growth," CFRA Research analyst Arun Sundaram said in a research note.
The impact: Smucker shares plunged 15.6% Tuesday.
