Dive Brief:
- A "misstep" has dragged down J.M. Smucker's coffee segment worse than expected, which contributed to a 3.5% drop in quarterly profit reported in its January earnings.
- Due to the rising costs of its coffee's main ingredient — the beans themselves — J.M. Smucker raised some of its coffee brand prices by 9% in June, which ended up turning off customers, who moved onto private-label brands with lower price tags.
- The company adjusted its expectations for the year ending in April 2015, which included warnings of lower earnings and an estimated 15% drop in coffee profits.
Dive Insight:
J.M. Smucker's weak coffee segment dates back for awhile now. This includes the end of the company's first fiscal quarter, when it dropped its Life is Good coffee brand due to poor sales. The company now also expects a dip in sales this quarter due to the coming acquisition of Big Heart Pet Brands.