JM Smucker optimistic about coffee despite sales slowdown in premium segments

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“Earlier this this year, we led the market increasing prices to recover significant commodity cost inflation, which impacted price gaps and elasticities”​ across the coffee portfolio, most notably in the premium segment, CEO Mark Smucker said in prepared remarks about JM Smucker Co.’s second quarter of fiscal 2023, ending Oct. 31.

“As a result, the Dunkin brand grew net sales modestly ​[at 3%] as volume decelerated, consistent with trends within the premium coffee segment,”​ contributing to an overall 13% drop in volume in mix in the coffee segment over the same period last year and a 10% drop in segment profit to $187.7m, Smucker said.

The company’s K-Cup portfolio also saw a slowdown as more consumers shifted away from premium products to save as inflation across categories continue to squeeze their budgets.

Smucker hypothesized the deceleration in the K-Cup business may not be a loss for the company, but rather “there may have been some folks brewing more drip coffee,”​ which he dismissed as not a sustainable trend.

“Obviously, brewer penetration in the Keurig brewers has grown significantly over the last several quarters. So, we would expect over time that would continue to benefit us,”​ he said.

In addition to expecting additional growth of single-serve coffee in the coming quarters, Smucker said he also remains “confident in the overall health of the Dunkin brand, its leadership position and our long-term outlook for growth.”

Price gaps between Smucker brands, competitors starting to close

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