By Paul Ziobro
Kraft Foods Group Inc. (KRFT) is cutting prices 6% on Gevalia
coffee sold at supermarkets and other retailers due to the drop in
green coffee costs, following a similar move by Starbucks Corp.
(SBUX).
Kraft's price cut goes into effect May 5, a few days before
Starbucks plans to initiate a price decrease that averages 10% for
its namesake and Seattle's Best coffees sold at retailers.
Starbucks last month announced plans to cut prices, which go into
effect May 10.
The lower prices on Gevalia at retail come as Kraft is taking
direct aim at Starbucks in its recent advertising campaign, where
it claims that more consumers prefer Gevalia's House Blend over
Starbucks House Blend. Kraft is using the ad to try to make up
ground in the premium coffee segment, which is growing faster than
mainstream brands.
The price declines on the higher-priced bagged coffees offered
by Starbucks and Kraft come after Kraft--which also owns Maxwell
House, and J.M. Smucker Co. (SJM), owner of Folgers--cut prices 6%
on those brand and other mainstream coffees.
The coffee makers are responding to a sustained drop in the
price of green, or unroasted, coffee.
A Kraft spokesman said in an emailed statement that the price
cuts on Gevalia don't apply to single-serve cups compatible with
Green Mountain Coffee Roasters Inc.'s (GMCR) Keurig machines, discs
used with Kraft's Tassimo machines or on products sold through its
online store.
News of Kraft's plans to cut Gevalia prices were earlier
reported by Reuters.
Shares of Kraft, which late Thursday reported
better-than-expected first-quarter earnings, rose 6.3% in recent
trading to $53.72.
Write to Paul Ziobro at paul.ziobro@dowjones.com
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