Strauss (SGLJF): Brazil Coffee Price Increases Reach 7-15%

Brazil's coffee price increases have already reached the shelf. On its FY2026 second-quarter earnings call on August 12, 2026, Strauss Group (SGLJF) said the three roasters that together hold 75% of the Brazilian market — Strauss, JDE Peet's and Melitta — have all announced list price increases of 7% to 15% following the rebound in Arabica [3]. Keurig Dr Pepper (KDP) and J.M. Smucker (SJM) had discussed green coffee costs on their own calls earlier in the same window, and both were still planning on cheaper beans [1][2].

How Brazilian shelf prices track the bean in both directions

Green coffee is the unroasted bean and the largest single input cost for a roaster; the roast-and-ground coffee on a supermarket shelf is that bean after roasting and grinding. Strauss's Brazilian coffee company, Três Corações, is the leader in that market, and it sets prices against a per-kilo target rather than a margin percentage: management has held gross profit at roughly BRL 10 per kilo, raising prices when the bean rises and cutting them when it falls [4].

The CEO laid out the arithmetic on the Q2 call. If green prices fall 20% and selling prices follow, revenue falls 15% to 20%, the fixed unit profit lands on a smaller revenue base, and the reported margin percentage rises sharply. If green prices rise 20% and selling prices rise 20%, the margin percentage falls while absolute profit still grows [3]. The rule only survives if rivals price the same way — with three companies covering 75% of the market passing costs through together, no one gains share by holding prices down [3].

Record profit in the quarter prices fell

In the second quarter of 2026, Três Corações reported sales down 8.2% to BRL 3.25 billion, which the company attributed to passing lower green coffee costs through to consumers. Gross margin improved to 27.5% and EBIT rose 35% to BRL 378 million, an EBIT margin of 11.6% and a record second quarter for the business [3]. Falling revenue and record profit arrived together because the per-kilo gross profit in reais did not move.

By the August 12 call the input had turned. KDP described the same rule from the other side: JDE Peet's has already passed lower coffee prices through in certain formats and regions, while the US Keurig and K-Cup model is less pass-through in nature [2]. Taken together, these disclosures support a bounded claim — in Brazil, a move in the bean shows up first in shelf prices and revenue, and has a much smaller effect on the roaster's profit.

The origin has repriced while US plans assume the opposite

Both US cost outlooks were set on the down-leg of Arabica. On June 9, 2026, SJM said its full-year outlook included mid-single-digit percentage deflation driven largely by green coffee [1]. On August 6, 2026, KDP said it had good line of sight to improving coffee costs in the second half as lower-cost inventory moved through, and expected pricing to contribute less to net sales in H2 than in H1 [2]. Arabica futures closed January at 332.25 US cents per pound, fell to 265.60 in May, returned to 332.10 in July and traded at 318.83 on August 12 [5].

Two boundaries apply. The 7% to 15% increases across the three Brazilian majors come from Strauss alone; JDE Peet's and Melitta have not confirmed them separately [3]. And the K-Cup model passes costs through weakly by KDP's own account, so the Brazilian rule does not transfer to US shelves [2]. Two things are checkable from here: whether Três Corações next reports rising revenue and a falling margin percentage with per-kilo gross profit near BRL 10, and whether KDP and SJM revise their second-half and full-year green coffee assumptions.

Companies exposed to the same mechanism

• Westrock Coffee (WEST): A US coffee processor and co-manufacturer that roasts and packages coffee for retailers and foodservice chains, sitting on the same bean-to-shelf chain; this round of origin price increases will test the cost pass-through terms in its customer contracts.
• Black Rifle Coffee (BRCC): A US coffee brand that hedges bean volatility by locking purchase prices; those locks cover a limited period, so renewal pricing is exposed to the same leg of the Arabica move.

Sources

[1] Drillr · J.M. Smucker (SJM) · 2026-06-09 · FY2026 fourth-quarter earnings call

[2] Drillr · Keurig Dr Pepper (KDP) · 2026-08-06 · FY2026 second-quarter earnings call

[3] Drillr · Strauss Group (SGLJF) · 2026-08-12 · FY2026 second-quarter earnings call

What happened actually with the rise of Arabica, all companies have announced price increases in Brazil in different timing and in different percentage. But because of the prices going up, all of them issued price increases in the market that varies from 7% to 15%. And as we say, the Brazilian market is a market where we see almost a full transfer of green coffee prices to pricing to consumer. So as long as prices will go up, this will be transferred. And when prices go down, it will also be transferred. And again, the most important thing is to maintain the gross profit per kilo in real.

[4] Drillr · Strauss Group (SGLJF) · 2026-05-20 · FY2026 first-quarter earnings call

[5] Drillr · KCUSX Arabica coffee futures (US cents per pound) · 2026-08-12 · monthly closing series

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