Months ago, lots of folks would have agreed that there's nothing like a hot, "Original Glazed" confection from Krispy Kreme Doughnuts (NYSE:KKD). However, the recent downturn in Krispy Kreme consumption could make one wonder whether eating doughnuts has become some kind of difficult feat. Do folks want them pureed, the easier to consume them conveniently through a straw?
Just kidding. We all know Krispy Kreme, a Motley Fool Stock Advisor pick, blamed low-carb dieting for the sudden consumer change of heart last quarter (despite the fact that low-carb dieting didn't hit this company until oddly late in the trend). So, according to Krispy Kreme, its recent problems were not about laziness at all, but about carbohydrates.
And so, it may seem just a tad odd that Krispy Kreme's latest innovation is a line of frozen drinks that includes one flavored like its "Original Glazed" variety of doughnut, dubbed "Frozen Original Kreme," CNN reported yesterday. Just imagine that combination of ice-cream/sugar-shock headache. CNN also reported the calorie and carbohydrate content of the drinks -- let's just say these are no health foods. You're better off having an Original Glazed doughnut (220 calories, 22g carbs) than the 12-oz. beverage version (440 calories, 70g carbs) -- that is, if you're watching your figure.
All joking aside, though, the line of frozen drinks certainly has its merits, given the success of competitors with similar products. (Though I can't help but question the wisdom of the doughnut-flavored drink, but maybe that's just me.) Perhaps more heartening is that there are other frozen flavors on the menu, including raspberry, double chocolate, and, of course, latte.
Latte -- that's the real key here. Trends have shown it's all about coffee, not doughnuts. Allied Domecq (NYSE:AED), parent to Dunkin' Donuts, has shrugged off Krispy Kreme, implying that it's Starbucks (NASDAQ:SBUX) it's really after. With good reason, too -- the coffeehouse's earnings last night provided further evidence that it's got a good game going.
On the one hand, Krispy Kreme deserves some props for trying to go with what works (and for trying to capitalize on a proprietary flavor). We all know that Starbucks' frozen Frappuccino drinks are popular, though that company recently released a weight-watching version; Dunkin' Donuts has also been expanding its beverage line to include similar choices for its regulars.
However, given Krispy Kreme's own excuses about recent financial shortfalls related to low-carb dieting, it seems an odd time to release more super-sweet treats. For the time being, though, this company is known for sugary decadence and indulgence, and surely those never go completely out of style; for now we'll need to wait and see whether this will be one of the initiatives that'll sweeten up sales at Krispy Kreme.
Check out the pro and con opinions on Krispy Kreme's last quarter here:
- Saving Krispy's Kreme, by Rick Munarriz
- Krispy Kremed, by Bill Mann
Thumbs up or thumbs down on Krispy Kreme's new drinks? Place your vote and tell us why on the Krispy Kreme discussion board.
Alyce Lomax does not own shares of any of the companies mentioned.
