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J.M. Smucker Launches Folgers Iced Cafe; Grows Portfolio - Analyst Blog

Zacks Equity Research
Updated

Coffee maker The J. M. Smucker Co. SJM is looking to enhance its portfolio with the recent launch of its iced coffee - Folgers Iced Café.

Folgers Iced Café will be available in a 1.62 fl. oz. squeeze bottle for a retail price of $4.99. The product will come in four delicious flavors of Original Latte, Vanilla Latte, Caramel Macchiato and Hazelnut Latte. Customers can also enjoy their Folgers Iced Café with cold milk to refresh their day. The new addition to the company’s most popular brand Folgers will be available in grocery stores nationwide.

The company has started a promotional campaign called the Folgers Fridays Promotion from Jun 5, 2015 through Sep 4, 2015 on Facebook and Twitter whereby consumers have a chance to win Folgers products.

Smucker’s Folgers coffee brand has been experiencing volume declines due to an increase in coffee prices. The increase was largely due to a rise in green coffee costs. Prices of Arabica coffee have been on the rise as the result of a drought in Brazil since Jan 2014.

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Nevertheless, the company expects green coffee cost to fall from the second quarter of 2016, thereby benefitting the coffee segment. The acquired pet food business Big Heart Pet Brand (in March) is also expected to drive profit growth in 2016.

We note that Smucker’s strong organic sales growth, product innovation and constant efforts to expand through acquisitions have remained its strengths and helped the company to raise the top line to some extent. However, continued weakness in the Canadian dollar remains a headwind.

Smucker has a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the consumer staples sector include General Mills, Inc. GIS, McCormick & Co., Inc. MKC and Post Holdings, Inc. POST. All the three companies hold a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
GENL MILLS (GIS): Free Stock Analysis Report
 
SMUCKER JM (SJM): Free Stock Analysis Report
 
MCCORMICK & CO (MKC): Free Stock Analysis Report
 
POST HOLDINGS (POST): Free Stock Analysis Report
 
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Zacks Investment Research