Despite calls by US President Donald Trump for businesses to “eat the tariffs” and not pass them through to consumers via price hikes, many CPG manufacturers and retailers, including Walmart, are unable or unwilling to absorb the administration’s extensive tariffs given the industry’s historically slim margins.
For JM Smucker, this means raising prices for its coffee again in August – the fourth increase since June 2024 – to offset the Trump administration’s 10% tariff on imports across the board, which are compounded by record-high green coffee costs.
“The current US tariff impact on green coffee is our largest exposure that we will manage on top of navigating record-high costs for the commodity,” CEO Mark Smucker said yesterday during the company’s fourth quarter earnings call.
He explained, “Green coffee is an unavailable natural resource that cannot be grown in the continental US due to its reliance on a tropical climate. We currently purchase approximately 500 million pounds of green coffee annually, with the majority coming from Brazil and Vietnam.”
Even though price hikes contributed to an 11% increase in net sales for US retail coffee over the prior year the segment’s profit was neutral year-over-year due to higher commodity costs.
‘At-home coffee remains a strong and resilient category’
Despite the price increases, JM Smucker executives remain confident that US consumers will continue to buy the company’s coffee.
“Overall, at-home coffee remains a strong and resilient category that provides value to consumers in all economic environments, and at-home coffee continues to represent approximately 70% of all coffee drinking occasions,” Smucker said.
“Our portfolio provides an affordable price per serving as an alternative to other beverage experiences, such as the coffee shop, among others,” he added.
Smucker also noted he expects the commodity will “normalize over time as it has historically.”
His optimism for the company’s performance is based in part on its broad range of coffee products, including both value and premium options as well as a variety of formats, including ground, K-cups and liquid, he said.
Café Bustelo continues meteoric growth
Indeed, the company’s Café Bustelo brand “is one of the fastest-growing brands in the at-home coffee category,” Smucker said, noting its net sales grew 19% year-over-year within its US retail coffee portfolio in fiscal 2025 with net sales of about $400 million.
“The brand gained dollar and volume share in every segment it competes in, including the mainstream, one cup, and instant categories over the past year,” Smucker added.
Based on this growth, JM Smucker categorized Café Bustelo as a “key growth platform” for the overall company and plans to expand the brand nationally and to a broader consumer audience through marketing and innovation, including recently launched new roast profiles.
“These new products have received strong retailer acceptance that exceeded our initial expectations and will help drive another year of anticipated double-digit net sales growth for the brand,” said Smucker.
A ‘cautious’ outlook
Even though JM Smucker remains bullish on its coffee business, it is “cautious” in its overall predictions for fiscal year 2026 – providing a wider range for expected net sales of 2% to 4%.
It also expects adjusted earnings per share in the range of $8.50 to $9.50, which “reflects the impact from our coffee price elasticity” as well as increased marketing investments in key growth platforms – including Café Bustelo – and any additional impact from tariffs, Smucker said.