Kingsford’s parent company, Clorox, released earnings today for their quarter ended in September. There wasn’t too much charcoal talk, but there were some key points about the consumer that impact grill consumables.
Charcoal Sales Growth
Clorox didn’t get discuss how their grill business was doing specifically, but we can see from their SEC filing that they saw year-over-year sales growth. It’s important to keep in mind though that Kingsford had a couple of headwinds in previous years.
They performed price increases which caused them to lose market share to competitors. They subsequently focused on merchandising and got much of that back.
A major headwind for all of Clorox last August was a cyber attack. Any year-over-year results will be compared to results during their IT issues which caused production issues and out of stocks.
This quarter, we drove further progress as we fully restored overall market share, grew share in most of our categories and delivered results above our expectations, while continuing to make progress against our strategy for long-term value creation.
Our first quarter results were strong. Taking a step back, we entered fiscal 2025 in a position of operational strength, having fully restored supply, distribution and the vast majority of market share from the August 2023 cyberattack.
Linda Rendle, CEO of Clorox
That being said, 5% of their net sales in the quarter were from their grilling business. That’s flat from last year, which also was at 5% of net sales.
Their net sales increased from $1.386B last year to $1.762B this year. That means even with possible rounding on the 5% revenue share in either year, there was an increase in grill business sales.
Consumers Buying Value
The same macroeconomic issues impacting grill sales are also headwinds for product lines across Clorox’s portfolio. As a result, they’ve returned their promotions to pre-Pandemic levels.
In addition to increases in promotional levels, Clorox is also seeing consumers shopping for value. This applies both to package sizing and where they’re purchasing products from.
What we continue to see from the consumer is that value-seeking behavior. They’re looking for ways to maximize their budget. They’re buying larger sizes. They’re buying smaller sizes to get a low out-of-pocket. They are looking for promotion. So the promotions that we’ve put in place returning to those pre-COVID levels have worked well and we’re seeing temporary price reductions work well with the consumer.
Obviously, we’re seeing retailers fighting for shoppers’ wallets at this point. So you’re seeing different tactics that are very normal across different channels and different retailers. We’re seeing a shift of moving to more value-oriented channels for consumers. That continues. But I would say all of that is exactly in line with our expectations in aggregate.We expect that to continue for probably the balance of the year. These cycles usually run 12 months to 18 months. That’s our best guess at this point of what the timing will look like if we look at history. But I think it’s safe to say that there’s an uncertain environment out there, particularly in the U.S., over the coming months. We’ll see how that all plays out. But the good news is that for Q1, the consumer environment is exactly what we expected.
Linda Rendle, CEO of Clorox
Good news for Clorox, and other companies that have invested in building their brand, is consumers aren’t trading down. They’re remaining loyal in all categories, including grilling.
And I think I’ll just reiterate the point I made earlier on private label shares. What we’re not seeing is trading down to private label in our categories. Private label shares are down versus pre-cyber levels this quarter in every one of our categories except two and that’s wipes and salad dressing. And even for those, we’re growing share in those categories. So it’s coming — private label growth is coming at expense of competitors.
Linda Rendle, CEO of Clorox