J.M. Smucker CEO sees at-home coffee drinking as here to stay

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Coffee consumption at home — which boomed during COVID-19 lockdowns — is here to stay despite momentum to return to the office, according to one top consumer brand.

J.M. Smucker (SJM) CEO Mark Smucker told Yahoo Finance that "at-home consumption will stay elevated" with 70% of coffee drinking now happening at home, compared to 2/3 prior to the pandemic.

With a hybrid model in mind, Smucker believes people will continue "working from home" and "potentially for a long time," he added.

In the company's fiscal third-quarter earnings report, J.M. Smuckers' at-home coffee portfolio saw a 6 percent increase in net sales, only slightly lower than what the company saw in the second-quarter with 8 percent sales growth.

Brands leading the growth include Dunkin’ and Café Bustelo, which saw consumer take away up 12 and 15 % respectfully, according to company data. Smucker told Yahoo Finance that those two brands are the "fastest growing brands in the category...then K-Cups."

More specifically, the instant brew segment gained one and a half share points in the recent quarter and saw a record 2.6 million brewers sold during the 2021 holiday season with household penetration expected to reach 2 million households annually.

Inflation rises, but consumers unbothered

NEW YORK, NY - OCTOBER 02:  A view of Dunkin' Donuts K-Cups while Dunkin' Donuts Coffee at Home opens the first-ever Tiny Home run on coffee with Olivia Wilde on October 2, 2018 in New York City.  (Photo by Cindy Ord/Getty Images for Dunkin' Donuts)
NEW YORK, NY - OCTOBER 02: A view of Dunkin' Donuts K-Cups while Dunkin' Donuts Coffee at Home opens the first-ever Tiny Home run on coffee with Olivia Wilde on October 2, 2018 in New York City. (Photo by Cindy Ord/Getty Images for Dunkin' Donuts) · Cindy Ord via Getty Images

External headwinds like inflation for coffee commodities seem to have not taken a toll on sales growth, underscoring how consumers continue to spend despite higher prices.

Smucker's CEO told Yahoo Finance the company is doing "exceptionally well" navigating through this "unique dynamic environment, whether it's supply chain or inflation" with customers remaining loyal.

"We have been able to pass along inflation-justified pricing to our customers," he told Yahoo Finance. This comes as coffee prices climb with Arabica coffee futures up 76 percent in 2021 and coffee futures (KC=F) up 0.5% so far in 2022.

He adds, "we've been able to recover on a dollar-for-dollar basis our cost increases while maintaining momentum."

Still drinking on the go

Indeed, at-home consumption isn't expected to dwindle anytime soon, but it's worth noting J.M. Smucker is also keeping a close eye on the away from home category. That category saw net sales jump 29% in the latest quarter, while overall sales have returned to nearly 95% of pre-pandemic levels.

Smucker told Yahoo Finance that this segment is doing "fantastic" and shared insight on its more than decade-long strategic partnership with pure-play coffee and tea company JDE Peet’s (JDEPF).