Smucker’s will launch more “clean” & “healthy” products in fiscal 2016, executives say

By Elizabeth Crawford

- Last updated on GMT

Smucker’s launchs more “clean” & “healthy” products in fiscal 2016
Peanut butter and jelly maker J.M. Smucker Company plans to introduce more than 100 new products in the coming year – most of which will be “clean” and “healthy,” according to company executives.

“Innovation is really key to us and healthy innovation is really key to us,”​ CEO Richard Smucker told investment analysts June 4 during the firm’s fourth quarter earning call.

He explained, “Our innovation pipeline is pretty full right now,”​ and “a lot of them are around healthy alternatives”​ that consumers are demanding.

Mark Smucker, president of the firm’s Consumer and Natural Foods segment, added that a lot of the recent and upcoming launches also are “about clean labels,”​ including products that have been reformulated without undesirable ingredients, preservatives or additives.

For example, “four years ago, we took trans fat out of Crisco; it used to be the poster child for trans fat and now its without trans fat,”​ said Richard Smucker. He added earlier this year the company introduced its Purely Simple Pillsbury baking mixes, which have “very simple ingredients”​ and a line of fruit spreads sweetened with honey.

“A lot of our innovations [are] being driven by better ingredients, simpler ingredients and those have contributed about 7% of our sales this past year,”​ said Richard Smucker, who added the company hopes to repeat that level of sales success from new products in fiscal 2015, which began May 1.

The company’s Natural Food division also “has been growing fairly significantly over the past few years. And of course, [its] focus is on both natural and organic,”​ added Vice Chairman Vince Byrd.

The firm’s focus on healthier, simpler products reflects consumer demand and because the company has been moving in that direction for several years it is well positioned against “the challenge processed foods are under,”​ said Richard Smucker.

“Our portfolio, we feel very good about,”​ as “we’re in a lot of good categories that go against the grain, which in this day and age is where we want to be,”​ he added.

The firm’s innovation pipeline also will focus heavily on snacking, as it has for the past few years, Richard Smucker also noted.

“We’re also entering snacking in a big way,”​ such as with the launch of Jif To Go and Jif bars, he said.

As the firm’s focus on cleaner products and snacks demonstrates, the firm wants to make sure it launches quality and not necessarily just quantity new products, added Mark Smucker.

Reawakening coffee sales

One of the products the firm will launch this year is Folgers Perfect Measures, which are pre-measured coffee tablets with no additives, Mark Smucker added.

In addition to being very convenient for consumers, the tablets will compete directly with K-cups and will address a micro-trend the firm identified of consumers diluting their coffee and, therefore, buying less of it.

Competition in the coffee category, in addition to higher commodity costs, have caused sales of the firm’s coffee products to sag in the past year, resulting in the total company’s net sales and earnings per share falling short of its original expectations for the year.

Net sales for the quarter increased 17% to $1.45 billion and 1% for the full year to $5.69 billion, the firm reported. The adjusted earnings per share was $5.38 for the year, which was in line with previously adjusted expectations.

Despite the firm’s ongoing problems in the coffee segment, the executives predict the category will turn around thanks to several factors, including lower commodity costs, new packaging for Folger’s canisters, the launch of Dunkin’ Donuts branded K-cups and other upcoming innovations, such as Perfect Measures.

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