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Americans – no longer afraid of fat – consume more nut butters and Jif, JM Smucker Co., still holds nearly one-third of the market. So, why are we blaming peanut butter for reducing its forecasts all year long?
According to data from Euromonitor International, Jif sales in the United States have increased for two consecutive years, widening its gap over No. 2 Skippy, a brand of Hormel Foods Corp. But even if Smucker sells more, the cost of making peanut butter increases and the price he gets for each pot decreases, which reduces the profitability of making sandwiches.
Increasing competition from low-cost private label brands is making it difficult for Smucker to charge more, Financial Director Mark Belgya said in a telephone conversation with analysts Wednesday morning after posting the results. second quarter.
Problems with peanut butter, coupled with lower coffee prices, have led the company to reduce its sales outlook for the current year from $ 8 billion to $ 7.9 billion. Smucker shares fell 7.2% after the release of the results, the largest intra-day decline since August.
Nevertheless, the overall volume trend is positive, with sales of the total grade of nut butters and seed butters up 1.3% since 2013, according to Euromonitor. In addition to the gains of natural brands like Justin's Hormel, a pickup in other nut butter deals is also at stake.
"People are growing in other nut butters, almond butter and cashew butter," said Michael Halen of Bloomberg Intelligence. They are also looking for healthier, less sweet and non-allergenic options. The big brands are expanding their offer more and more.
–Bloomberg News
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