Peanut butter prices soar

JM Smucker's sales are falling after a 2011 price hike.

By Kim Peterson May 23, 2012 3:17PM
Credit: © Bill Hogan/Chicago Tribune/MCT via Getty Images
Caption: Jif Natural Peanut ButterHave you noticed how expensive peanut butter is lately? It could get worse, and J.M. Smucker (SJM) is feeling the pain.

Prices jumped by 50.6% in the first quarter, the Bureau of Labor Statistics reports. That reflects a similar price jump for peanuts. U.S. prices have soared 54% in the past 12 months to 34.6 cents a pound, Bloomberg reports.

The problem has been a lack of supply. Farmers in the southeast U.S. suffered from drought, and some moved their acreage to other crops. The tight supply should ease this fall, as Georgia farmers are allocating more land to peanut crops and Argentina is expected to deliver a record crop.

The soaring price of peanut butter has already caused problems for J.M. Smucker, which makes the Jif brand. The company raised peanut butter prices by 30% at the end of last year and saw sales volumes fall as a result.

In general, Smucker's average prices are up 16% from a year ago. That kind of increase is just not sustainable, and Smucker responded earlier this month by cutting coffee prices. Smucker makes Folgers, Millstone and Cafe Bustelo.

But when it comes to peanut butter, don't look for any price cut soon. In its latest quarterly filing, Smucker said peanut butter is just getting more expensive. "Peanut costs are expected to be significantly higher in the fourth quarter than in the third quarter of 2012 as the inventory of lower-cost peanuts is depleted," the company said.

For the three months ended Jan. 31, Smucker said that U.S. sales volume for Jif peanut butter fell by 13%. But the 30% price increase more than made up for it, giving Smucker an overall 17% increase in sales revenue for Jif.

The drop in sales volume was due to a few factors, Smucker said. Shoppers bought peanut butter ahead of the price increase last November. Also, competitors were being aggressive on price. Finally, there price hike has turned off some shoppers.

Peanut butter isn't the only category seeing big price increases. Condiments such as pickles, olives and relishes were up more than 38% in the first quarter as well, according to the Bureau of Labor Statistics. Chicken prices rose by 11%, but fish and seafood prices dropped slightly. Pork chop prices dropped nearly 12%.

Peanut prices may decline this fall, but it will take a while for Smucker to recover. In other words, don't expect an easing of prices on supermarket shelves anytime soon.

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Tags: SJM
44Comments
May 23, 2012 6:26PM
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Inflation Games,

As the article attests, almost every food item has seen double digit price increases on the store shelves. Couple this with the price gouging of gasoline at the pump, utilities, and almost everything else and our blowhard federal government says that annual inflation is at only 3.5% ??? Give me a break! Maybe some of these stripe-suited gurus in Washington DC should come down from their ivory towers and six figure incomes long enough to see the prices going up almost daily in every store for everything people need. Of course, if I was a millionaire Senator or Congressman driving a Mercedes Benz S-class sedan I wouldn't care much if the grocery bill went up twenty or thirty more dollars a week or that it cost an extra twenty dollars to gas the car each filling. These politicians are totally out of touch, are hiding the truth from the public and conveniently have their head up their ****.

 

Peace to all

May 23, 2012 6:08PM
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By raising the price to compensate for the loss in sales, They are in effect putting themselves out of business. Not very bright.
May 23, 2012 6:55PM
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Limited supply cause's a price increase,ok got that part.

But when you have a record crop and have already raised prices then your only going to hurt yourself as people will just put it back on the shelf and go without!

The common consumer doesn't have anymore money left to give or be taken and so in the land of plenty will now go without!

The thing is if people go without long enough they decide they don't need that item anymore.

Or they find a subsitute....so easy on the price fixing folks or end up like the cereal companies!

The cereal folks changed the cereals because of a focus groups goofy ideas about fixing something that wasn't broken and cause prices to rise and demand to dewindle.

Guess from now on it'll just be beer and no peanuts.

The consumer is thread bare and taxed almost to death,wish up business people!

May 23, 2012 3:56PM
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So peanuts are going up while gold goes down. I guess you could call peanuts golden and gold peanuts from an investment standpoint.
May 23, 2012 6:11PM
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I quit eating it because of the price
May 23, 2012 7:18PM
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Sure...raise the prices of peanuts, pickles and other foods we love or are good for us, while lowering the costs of ice cream and other junk foods. Why is America getting fat ? Just take a look. We can't afford to eat well, so we buy more junk food so we can eat at all !!
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that's cause pb rules................i could eat pb for breakfast lunch & dinner. if it wasn't for having a family my monthly food bill would be roughly around $50.00.
May 23, 2012 7:55PM
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I just dont know what to think about anyone who does not like Pnutbutter.

Your mother must have dropped you on your head or something.

Yo Man,everyone loves Pnutbutter.

May 23, 2012 8:27PM
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Wait--you jack up the prices 30% and then people stop buying it as much?  Who on earth could possibly have foreseen such a cataclysmic outcome?
May 23, 2012 6:51PM
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I wonder, am I smart, or what. There are only a few things I absolutely  need in this world, other than those, if a product costs too much - I just won't buy it anymore.......who's zooming who?
May 23, 2012 6:38PM
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The article says........"PEANUTS HAVE SOARED TO 34.6 CENTS A POUND........"   I wish!  My local feed store wants $2.75 a pound for raw peanuts in shell, 50 pound sack. Feed store in nearby town wants even more. If I could get for $.34 a pound, I'd have someone ship me some.
May 23, 2012 7:20PM
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Food For Thought ( Toledo Ohio) gives sack lunches including peanut butter and jellry sandwiches. Contrebutions of peanut butter have gone down. The ones this hurts most are those in the most need.
May 23, 2012 8:37PM
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ACK!  Peanut butter is my dietary stable!  I LOVE the stuff!  If you pass a sad and hungry red-headed girl holding out an empty jar of peanut butter, please toss your spare change in the jar...

May 23, 2012 6:49PM
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I am sure the prices will go back down once there is a surplus of peanuts.  :))
May 23, 2012 8:42PM
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Hey it has worked for the oil industry so why not peanut butter. Manipulate the supply Manipulate the price, easy money.
May 23, 2012 6:54PM
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What I wouldn't give for a simple peanut butter sandwich. I became allergic to peanuts 2 years ago........How the hell does that happen at 58 yrs old? I would pay $100 if i could eat a bag of peanuts at a ball game or for a simple P.B. and jelly sandwich!
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Hope Reese peanut butter cups do NOT rise in price. :-(
May 23, 2012 6:34PM
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Yea raise the price so fewer will buy then layoff thousands and Obama will still tell you how many jobs he's created while reducing the debt in half by his first term. What a lawyer he is.
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