Information Resources Inc. (IRI) has released a study saying that industry-wide doughnut sales were off 2.3 percent in the 12 weeks ended June 13 compared to the same period a year earlier. The decrease was worse than the 1.8 percent drop in the 12 weeks ended May 16.
The data, according to a Reuters report, includes doughnut sales at supermarkets and many other food retailers, but does not include sales at Krispy Kreme or Wal-Mart.
Still, it was only a month ago that Krispy Kreme warned that its 2004 profits would be off because of the impact of low-carb diets on doughnut consumption in the US. So it seems likely that Krispy Kreme’s numbers would be similar to the broader IRI figures.
The data, according to a Reuters report, includes doughnut sales at supermarkets and many other food retailers, but does not include sales at Krispy Kreme or Wal-Mart.
Still, it was only a month ago that Krispy Kreme warned that its 2004 profits would be off because of the impact of low-carb diets on doughnut consumption in the US. So it seems likely that Krispy Kreme’s numbers would be similar to the broader IRI figures.
- KC's View:
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It will be instructive to watch Krispy Kreme deal with this issue, deciding how far it has to go in order to compensate for low-carb mania. Is it a fad that will peter out, and therefore needs minimal attention. Or is it a broader trend that will be reflected in people’s eating habits for years to come?
That must be one of the hardest things about being a retailer – trying to figure when it is right to reinvent the business, and when a simple “tweaking” will do. (Though the rule of thumb these days seems to be that if you’re thinking that it’s time to reinvent the business, you’re already two years too late.)
At the moment, Krispy Kreme seems to be making intelligent moves. Like Dunkin’ Doughnuts before it, the company is putting more attention on coffee sales and developing a line of frozen drinks. And, it says it will shortly be introducing a sugar-free doughnut and other, lower-fat versions of traditional favorites.
We’re not sure we’d buy stock in the company right now (its stock is trading near its 52-week low, but we’re careful never to give stock market advice since we have no idea what we’re talking about). But we are pretty sure that Krispy Kreme is in this game for the long haul, that low-carb diets won’t be the hot topic two years from now, and that people always will want to indulge themselves…
