The U.S. retail coffee segment net sales increased 4 percent in the first quarter of 2013, compared to the first quarter of 2012, as increased volume and favorable sales mix driven by K-Cups® were somewhat offset by lower net price realization reflecting price declines since the first quarter of 2012. Segment volume increased 5 percent in the first quarter of 2013, compared to the first quarter of 2012, as the Folgers® brand increased 4 percent and Dunkin' Donuts® packaged coffee increased 11 percent. Overall segment results also benefited from approximately two weeks of incremental Cafe Bustelo® brand net sales included in fiscal 2013 related to the acquisition of Rowland Coffee Roasters, Inc. on May 16, 2011. Net sales of Folgers Gourmet Selections® and Millstone® K-Cups® remained strong and increased $30.7 million, compared to the first quarter of 2012. K-Cups® represented 6 percentage points of segment net sales growth, while contributing only 1 percentage point growth to volume.
The U.S. retail coffee segment profit decreased$13.3 million, or 10 percent, in the first quarter of 2013, compared to a strong first quarter of 2012, which benefited from the timing of higher prices in advance of the higher costs subsequently recognized in fiscal 2012. Additionally, in the current quarter, the timing of price decreases and higher green coffee costs realized impacted results unfavorably.The timing impact was somewhat offset by the benefit of sales mix, lower selling and distribution expenses, and favorable unrealized mark-to-market adjustments. The benefit of unrealized mark-to-market adjustments on derivative contracts was a gain of$8.1 million in the first quarter of 2013, compared to a gain of$7.0 million in the first quarter of 2012. The company's current pricing reflects its expectation that lower green coffee costs will be recognized in upcoming quarters.