Exclusive Claff Heinz requires coffee suppliers to notify 60 days of tariff hikes

LONDON/NEW YORK (Reuters) - Kraft Heinz, a food maker selling Maxwell House, the top U.S. coffee brand, has asked its coffee suppliers for 60 days before asking the coffee supplier before U.S. President Donald Trump’s tariff filing for hiking prices.

In documents sent in April, the company asked suppliers to raise prices only if the tariffs are permanent and to immediately withdraw them if the tax is levied, highlighting the struggles facing U.S. companies to curb the consequences of Trump's instability and punitive trade policies.

The document also undermines the hopes of investors in U.S. companies and Trump administration officials that large purchasing power companies like Kraft Heinz can negotiate better deals from their suppliers to offset tariffs.

Under the Green Coffee Association contract, which covers most goods leading to the United States, the tariff costs imposed in the destination market “should be borne by the buyer.”

"No one (on the trade side) has reached the panic button because what is the rule," said a European-based coffee trader.

Kraft Heinz's brand also includes premium Gevalia Coffee, which he declined to comment.

The company also said it hopes suppliers can work with it to “miscue the impact of tariffs.”

Last month, the U.S. imposed a 10% universal tariff on all imported goods, including coffee, and is in separate trade agreements with different countries.

Trump suspended a steep tariff plan on April 2, except for Chinese imports.

Kraft Heinz’s stale brands like lunch, Kraft Macaroni and cheese, Oscar Meyer is working to keep a position against private label and startup competitors on grocery store shelves.

Its sales and sales fell for the quarter ended March 29, with Kraft Heinz lowering sales and profit forecasts for the rest of the year.

Tough times

Coffee has not faced tariffs from the United States since the colonial period, and roasters and suppliers are struggling to deal with how to deal with it.

Kraft Heinz's coffee business reported net sales for the fiscal year ended December 28 at $835 million, or about 3% of its $25.8 billion net sales.

The packaged food maker said it took advantage of the cash flow of coffee sales not rapidly growing and invested in higher growth brands.

Rising coffee prices could hurt the Kraft Heinz budget-friendly Maxwell House brand. The 27.5-ounce jar costs $11.79, about 21 cents per cup.

Kraft Heinz's estimate of higher input costs has increased by 3% this year, but its coffee costs have increased significantly due to adverse weather and insufficient crops, as raw bean prices have nearly doubled in the past year.

Industry sources told Reuters that roasters like Kraft Heinz agreed on the price of coffee months ago when they signed up for raw beans purchased from suppliers, which were sourced from tropical regions. (This story has been reposted to replace the outdated logo, no text changed)

(Reported by Jessica Dinapoli of New York, Editors by May Angel of London, Lisa Jucca and Richard Chang)