DE Master Blenders 1753 had to take quite the drop in sales in the third quarter of the financial year: total quarterly sales dropped by 9.4 percent to 643 million euro (-3.2% on a comparable basis). Especially in Western Europe the coffee of Douwe Egberts is rather weak.
Lower prices, more promotional activities
The trading update the Dutch coffee and tea company published did not look very positive: “The segment Retail – Rest of World sustained the good performance of the preceding quarter” (+6.8% on a comparable basis), but in Western Europe, Douwe Egberts fared less well: sales there were 8.5% lower on a comparable basis.
That is among other a consequence of “the earlier announced management changes in the five key countries, lower volumes in France due to tough trade negotiations and by aggressive promotional activities by private labels in most Western European countries.”
Because of the bad results in January and February, management has decided to drop prices and to increase promotional activities “to re-establish its competitive position, which has resulted in a significant rebound in volumes and sales performance from March onwards.” This made the market share for coffee rise in the Netherlands, Denmark and Germany, but it remained stable in France and in Spain and Belgium market shares dropped.
The Dutch company, which will soon be taken over by German investment company Joh. A. Benckiser (JAB), expects “to grow its segment sales by 0 to +2%. The outlook reflects continued price and volume pressure in Western Europe. The company is therefore rebalancing pricing and volumes to re-establish its competitive position, which affects sales.”