Dutch coffee giant JDE Peet's has seen a resurgence of its hospitality turnover in the second quarter. Nevertheless, its sales growth came primarily from home consumption.
Strong organic growth
JDE Peet's confirmed its full-year forecast - which came as quite a relief to investors - with a turnover growth of 0.7 % to 3.2 billion euros in the first half of the year. That may seem rather modest, but the figure conceals a surprisingly strong organic growth of 4.2 %. Analysts had expected the underlying growth figure to be negative.
The growth comes primarily from the home segment, where sales rose by 4.9 %. In comparison, the sales growth of 0.7 % in the hospitality segment may look meagre, but that would not be correct: it is the first sign of recovery since worldwide restrictions on hospitality services due to Covid have been eased as of the second quarter.
Rising raw material costs
Moreover, the hospitality division also returned to profitability after JDE Peet's cut costs in this division. It means that CEO Fabien Simon is confident enough to confirm the annual forecast for organic turnover growth of 3 to 5 %, even though it was feared that this forecast would not be sustainable.
Those fears are fuelled primarily by the rising cost of raw materials and packaging. Simon confirms that these pressures have increased significantly, but insists that his company has become efficient enough to cope with them. That will be necessary because the CEO does not think he will be able to pass on the increased costs to customers any time soon. "It will take another two to three quarters", Simon said of customers' willingness to pay more for their cup of coffee, Dutch newspaper De Telegraaf reports.