Strong coffee sales energize JM Smucker earnings despite sticky slowdown of recalled Jif products

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The company reported yesterday that net sales for the quarter ending July31 increased 1% over the same period last year to reach $15m, including a 9% unfavorable impact from Jif peanut butter related to an outbreak of salmonella linked to its Lexington, Ky, manufacturing facility.

The recall also dragged down the company’s US retail consumer foods segment’s net sales, contributing a 32% unfavorable impact to a 29% drop in net sales compared to the pervious year, and the segment’s profits, which fell 54%, CFO Tucker Marshall told investors yesterday.

Despite these and other challenges related to inflation, supply chain challenges and other macro-trends, Marshall said the quarter “exceeded our expectations”​ with most of the increase coming from Smucker’s US retail coffee, pet food and Uncrustables business.

The increased contribution from all three businesses can be attributed largely to industry leading price increases necessary to offset inflation but which did push up elasticities slightly and squeeze some volume, but the company still managed to report sales growth across the board, CEO Mark Smucker said.

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In coffee, net sales increased 10% and dollar share for the company’s brands grew more than any other branded manufacturer for the fifth consecutive quarter – outpacing the overall coffee category, Smucker said.

“Café Bustelo was the fastest growing brand in the at-home coffee category, with consumer take away up 24% in the quarter,”​ followed by the Dunkin brand, which saw net sales increase 12% as it expanded beyond hot coffee into cold brew, K-cup and pre-pack roast and ground formats, Smucker said.

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