Smucker’s Aims to Gain Share From Coffee Shop QSRs With at-Home Alternatives

As consumers look for more affordable alternatives to their day-to-day small luxuries, The J.M. Smucker Company is stepping up its at-home coffee offerings, providing lower-priced alternatives to coffee shops.

In prepared remarks accompanying the food and beverage manufacturer’s first-quarter earnings release Tuesday (Aug. 29), Mark Smucker, the company’s president, CEO and chair of the board, noted that the shift toward at-home coffee consumption seen during 2020 has continued, with 70% of “all coffee drinking occasions” now at home. 

Now, the company is targeting coffee categories such as cold brew, which consumers typically turn to coffee quick-service restaurants (QSRs) for, offering a similarly low-effort option for a lower price point than ordering from a coffeeshop chain.

“Coffee [cold brew] concentrate is highly convenient for consumers, as it requires no brewing equipment, and allows for easy customization of the strength of coffee,” Smucker said. “We look forward to bringing more no-brew innovation to the at-home market, as we continue to make investments and explore opportunities in the fast-growing liquid and cold coffee segments.”

Certainly, consumers want lower-priced options for occasions where they would otherwise turn to restaurants.

Data from PYMNTS’ survey of more than 1,200 restaurant customers in March for the “Connected Dining” series revealed that between 70% and 80% of diners — depending on the generation — have been eating at home more often in response to rising prices.

Plus, additional research for the survey found that just 58% of consumers made restaurant purchases in June, down 9 percentage points from May — the steepest decline since last November.

This decline comes as restaurant prices continue to creep upward. Consumer Price Index (CPI) data from the U.S. Bureau of Labor Statistics (BLS) showed that year-over-year restaurant inflation amounted to 7.1% in July, almost twice the grocery inflation rate, and prices have increased every month so far this year.

Plus, consumers are increasingly willing to spend a little extra on coffee for at-home consumption. Discussing Smucker’s Dunkin’-branded at-home coffee products, Mark Smucker noted that “the recent premium category trade-down dynamic has moderated.” 

Meanwhile, coffee shop chains are singing a different tune. Starbucks CEO Laxman Narasimhan shared on the QSR giant’s earnings call earlier this month that the company is seeing consumers spending less time at home.

“The customer is becoming more on the go, and … we’re clearly benefiting from more from customers on the go,” Narasimhan said.

That said, leading coffeeshop QSR chains are inserting their brands into consumers at-home coffee routines where possible. Starbucks has a wide variety of different packaged coffee products, ranging from ground coffees to ready-to-drink beverages. McDonald’s has its McCafé at Home line. Tim Hortons recently announced its consumer-packaged goods (CPG) business’s entry the U.S. market with the launch of cold brew concentrate.

Additionally, many are looking for ways to make their in-restaurant products more affordable to price-concerned consumers. Panera Bread has its Unlimited Sip Club, which offers a free beverage every two hours for a flat $10.99 monthly fee, and Pret A Manger recently announced that it will expand its monthly coffee subscription service to the United States and France.