"It's significant because Maxwell House usually follows -- and matches -- Folgers," said Mike Pucciarelli, vice president of commodities for New Jersey-based roaster Weschler Coffee. "It sounds like one roaster's confronting the other. If they were playing poker, Maxwell House just upped the ante."

Maxwell House, a division of Philip Morris Co's Kraft Foods, said on Wednesday the company will cut the list price of its standard 13-ounce can of ground regular and ground decaffeinated coffees by 25 cents because of lower green coffee prices on world commodity markets.

The decrease, which takes effect on May 11, brings the price for a standard can of regular ground coffee to $2.51, and decaffeinated ground Maxwell House to $3.21.

Maxwell House's price cut is more thandouble the decrease announced last week by Procter & Gamble Co unit Folgers Coffee Co, who said it will reduce the list price of its standard 13-ounce cans of ground regular and ground decaffeinated coffees by 10 cents to $2.66 and $3.36, respectively, effective May 18.

Folgers is the largest roaster in the U.S. Followed closely by Maxwell House.While the companies had been neck-in-neck for many years, with each taking about 28 per cent of US market share for their primary name brand coffees, industry sources said Folgers had pulled ahead of Maxwell House. They speculated Maxwell House may be undercutting Folgers in an attempt to gain back market share.

"I would guess Maxwell House wants to regain market share," said Merrill Lynch beverages analyst Allan Kaplan. "Coffee bean prices have come down and they probably felt Folgers had not lowered prices enough. They can cut prices further and get market share."

Maxwell House Vice President of marketing Erv Frederick said, however, the aggressive cut in listprices was more than just a ploy to underprice Folgers and grab market share.

"We didn't take a look at what Folgers is doing, we took a look at what was necessary to get consumers to buy coffee," Frederick told Reuters. "With the market coming down over the last couple of months, the price reduction of 25 cents per equivalent pound is warranted, justified and sustainable as well."

Since late February, May futures traded on New York's Coffee, Sugar and Cocoa Exchange have fallen more than 30 cents per pound, or about 18 percent, in anticipation of ample supplies -- most notably from top-producer Brazil.

Estimates for the 1998/99 Brazil coffee crop, which will be harvested around June, range between 30 million and 40 million 60-kg bags, compared with about 22 million to 24 million bags the previous season.