According to documents sent by the American coffee brand Maxwell House to its suppliers obtained by Reuters,Maxwell House has lost hope in the tariff plan announced by the United States on the 2nd of last month, thus sending a notice to its suppliers. The notice requires that if coffee bean suppliers need to increase the price of raw coffee beans due to tariffs, they should give a 60 - day notice in advance
Maxwell House was founded in 1892 and is currently an instant coffee brand under the American food company Kraft Heinz. Both in China and the United States, its market share is second only to Nestlé. A can of about 780 - gram coffee powder is currently sold at around $8.00 in American supermarkets, or the price per cup is close to $0.15 , making it a relatively affordable coffee product brand in the American market.
In the past year, the price of raw coffee beans has almost doubled, which has already put great pressure on its costs. Now, with the addition of tariffs, it's like "when it rains, it pours." Kraft Heinz has raised its cost - increase expectation for this year from 3% to 5%. According to the financial report released by Kraft Heinz last year, the coffee business revenue including Maxwell House had net sales of $835 million in the fiscal year ending December 28, accounting for about 3% of Kraft Heinz's total annual revenue of $25.8 billion. Although it is not the main source of income, if this situation continues, it will make the business less attractive in this industry.
Traders in various coffee - producing countries are not worried about the tariff news. Because according to the current international trading rules, the cost of tariffs has been clearly specified in most raw - bean purchase contracts to be borne by the buyer. According to internal documents recently obtained by Reuters, Maxwell House has to accept this reality. It requires that when tariffs are confirmed, its suppliers are allowed to increase the price of raw beans but need to give a 60 - day notice in advance. At the same time, it also requires that if the tariffs are cancelled, the price should also be reduced.
On April 2nd, the United States suddenly announced that it would impose tariffs starting from 10% on 70 of its trading countries. Although the US soon announced a 90 - day suspension of this tax - increase plan to negotiate with dozens of countries. But as of now, nearly 40 days have passed since the announcement of the tax increase, and the US has only reached a tariff agreement with the UK. Since a large number of countries are involved and tariff matters can only be handled directly by major officials, it can only be processed at a speed of one country per day. Each round has to go through the process from proposing the agreement framework to bargaining step by step. It is believed that most of the negotiations may be completed only when almost all 90 days are used up.
Even if the negotiations are completed one after another in the short term, the difference in the results is only how much each country will be taxed. This also means that the cost of raw coffee beans entering the US is about to increase by 10%, putting pressure on people's lives. Although the National Coffee Association of the United States has applied to the White House for an exemption, the probability that this charge will be stopped by the White House is very low.
Coffee producers and consumers in the US will face the same fate. Just after the announcement of the price increase due to the rise in coffee bean prices, there will be another price increase due to the tariff increase.
