NEW YORK Aug 20 U.S. retail coffee profits for
J.M. Smucker, the maker of Folgers and the biggest U.S.
roaster, fell by 4 percent in its May-July quarter on a
combination of pricing and promotions, the company said on
"Lower price realization resulted in the decline in net
sales for the segment and for the company," said Richard
Smucker, chief executive of Smucker on a call with analysts to
discuss first-quarter 2015 results.
Price realization is the combination of list price and
The Orrville, Ohio-based company, which also makes Jiff
peanut butter and Smucker's jam, reported net sales of $1.32
billion, down 2 percent from $1.35 billion a year ago, primarily
due to the coffee segment's performance.
"Pricing on committed promotional programs, along with
continued price investment to remain competitive on shelf,
temporarily delayed the impact," of a 9 percent price increase,
said Vince Byrd, Smucker president and chief operating officer.
"We expect full reflection of the price increase in the
The weaker coffee profits come as green coffee prices remain
highly volatile. An unprecedented drought in top grower Brazil
caused arabica futures prices to nearly double within
three months to a 26-month high in April. In June, Smucker
raised its list prices for most of its U.S. packaged coffee by
about 9 percent, triggering other large roasters to make similar
Arabica prices are now down around 15 percent from the April
high while robusta coffee, a bean that some roasters add
to their brewed blends as a lower costing alternative, is down
11 percent from a one-year high reached in March.
Smucker's U.S. retail coffee net sales fell by 2 percent to
$502.7 million in the quarter ended July 31 while its segment
profit fell by 4 percent to $137.6 million. That took place as
its U.S. coffee volume rose by 2 percent in the quarter, the
ninth straight quarter of year-over-year volume growth, driven
by the its flagship Folgers brand, as well as Cafe Bustelo and
Dunkin' Donuts, company executives said.
Also during the quarter, Smucker discontinued the Life Is
Good coffee brand because of low brand awareness in regions
other than the U.S. East and West Coasts.
(Reporting by Marcy Nicholson)