Green Mountain Coffee Roasters Inc. (GMCR), Starbucks Corporation (SBUX): Falling Coffee Prices Will Lead to What?

However, The J.M. Smucker Company (NYSE:SJM), the producer of Folgers, the top-selling coffee in the U.S., has been changing its coffee prices based on the market cost of coffee. This means that the company maintains its coffee margins while lowering prices for consumers, potentially building brand loyalty and increasing sales. That said, while customers gain, investors have been left behind. In comparison to Starbucks Corporation (NASDAQ:SBUX) and Green Mountain, The J.M. Smucker Company (NYSE:SJM) has not had its earnings estimates revised noticeably higher for 2013 and 2014. The average analyst has raised estimates about $0.10 per share, or 2% for 2013.

Foolish summary

The record coffee crop last year has pushed coffee prices to record lows. This trend is set to continue as yet another record coffee crop is set to be harvested this year and Brazil keeps supporting its farmers, who, without help would be forced to sell their harvest at a loss.

This bad news for farmers is not bad news for Starbucks Corporation (NASDAQ:SBUX)’ and Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR)’s investors who are set to benefit as lower coffee prices lead to wider profit margins for these coffee giants.

The article Falling Coffee Prices Will Lead to Higher Profits for Starbucks originally appeared on Fool.com and is written by Rupert Hargreaves.

Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool recommends Green Mountain Coffee Roasters and Starbucks. The Motley Fool owns shares of Starbucks. Rupert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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