Where do you get your morning cup of coffee? J.M. Smucker hopes it’s at home.
As consumers look to save amid higher inflation, J.M. Smucker (SJM) is looking to keep up the momentum that it gained over the pandemic of more Americans drinking coffee at-home.
To entice consumers to stick around, pricing is key, he said.
“Pricing is competitive. We’re seeing the pricing in the category more normalized, and that allows us to compete effectively and continue to grow all three brands, which are showing solid performance,”
Its coffee brands — Folgers, Café Bustelo and licensed at-home Dunkin’ business — are three of the top eight brands in the overall at-home coffee category, accounting for 26% of overall market share. Smucker thinks the momentum will continue as consumers look to save.
“Folgers is the number one brand … Here we play across the value spectrum, offering products that consumers can afford. But even our Dunkin’ brand, which is the more premium brand, has actually returned to growth this quarter, so we would expect to see that momentum.”
Its mainstream roast and ground segment made up nearly half, 47%, of its US retail coffee segment in its latest quarterly results, which topped analyst expectations. The overall segment saw net sales increase 7%, driven by increased prices.
Shares of J.M. Smucker are up more than 18% from last year, but down slightly, 6.3%, year-to-date.
To help maintain and grow its customer base, the Ohio-based company is leaning into innovation.
“As the leader in coffee, over the years, we have effectively transitioned our portfolio to where the growth is, so you think about K-cups, premium coffee, there was a shift there.”
What’s the next trend for coffee drinkers? J.M. Smucker is betting big on liquid concentrate.
“Consumer behavior is now consuming a lot of liquid coffee. They’re making customized drinks at home in the morning. Millennials and Gen Z are doing a lot of this,” Smucker said.
To meet this demand, J.M. Smucker is set to unveil a Dunkin’ cold brew concentrate in July “to get into that market” as it looks to build the Dunkin’ licensed-business to reach $1 billion in sales in the next four years.
It also plans to expand this offering to other brands in the near future.
“Later in the year or in the next fiscal year, we’ll be launching liquid coffee for Bustelo as well, so both of those brands will be playing in that space, and just another example of us shifting to where the consumer needs us.”
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
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