JM Smucker Co reorganized its corporate leadership structure earlier this month, and the snacks and spreads giant is positioned for organic growth, debt paydown and shareholder returns, according to CEO, President and Chairman Mark Smucker at the CAGNY (Consumer Analyst Group of New York) conference on February 18.
The company plans to expand margins in US retail coffee and sweet baked snacks, Smucker said.
Coffee is still recovering from green coffee tariff costs, but recent changes in US trade policy excluding the commodity enables Smucker to lap tariff costs (meaning they will no longer weigh down the year-over-year comparison base), he added.
The company’s strategy is to move away from acquisitions and focus on brands that are working, he said.
Smucker’s executive leadership reset
The leadership restructuring most notably expanded the roles of CFO Tucker Marshall and General Manager Rob Ferguson.
In addition to his CFO role, Marshall also now serves as executive vice president, Frozen Handheld and Spreads and Sweet Baked Snacks. Ferguson, who previously oversaw coffee and procurement, now serves as chief product supply officer, executive vice president of Coffee, Pet and Away from Home.
Jill Penrose, chief people officer at JM Smucker, now additionally serves as chief of staff.
“These changes are designed to support the continued execution of our long-term growth strategy, further the momentum of our portfolio of leading brands and enhance profitability and earnings,” said Smucker, who reassumed the role of president in the Feb. 10 announcement.
The executive overhaul also eliminated the role of chief operating officer, with John Brase leaving the company.
Coffee growth in focus
JM Smucker’s prioritization of organic growth, debt paydown and shareholder returns precludes the company’s past strategy of growth through acquisition, Smucker said.
“Instead, our attention is firmly on driving sustainable, organic growth,” he said.
That includes further development of its coffee brands, particularly Café Bustelo, and its Uncrustables sandwiches and peanut butter and spreads business. Other key growth platforms include Smucker’s Hostess brands and its pet food brands, Milk-Bone and Meow Mix.
Smucker has lauded the success of its Café Bustelo line in past earnings calls, but on Wednesday he detailed that the brand is expected to surpass $500 million in net sales – a year-over-year increase of more than $100 million – this fiscal year.
“This strong growth is the result of a strategy centered around expanding the brand’s broad national appeal through distribution gains, our distinctive and unique ‘Está Aquí’ marketing campaign and delivering innovation that meets the needs of the consumer,” Smucker said. “The Café Bustelo brand is outpacing the category across all generations and ethnicities, which reflects our strategy of becoming more accessible and expanding our consumer base.”
The brand is growing in popularity with Gen Z and Millennial consumers, prompting the company to release new roast profiles and ready-to-drink single-serve options.
Meanwhile, Smucker’s Folgers Coffee brand remains the No. 1 brand in total volume share and in total buyers among younger consumers in the at-home coffee category, Smucker said.
Smucker is also launching a new marketing campaign for its Dunkin’ Coffee brand, which will include expanding the portfolio to offer medium dark and dark roast offerings.
“We are launching Dunkin’ Twilight and Dunkin’ Bold Blend, two new roasts that deliver the bold cup of coffee that consumers are increasingly seeking,” Smucker said. “These offerings will begin shipping this spring.”
Unstoppable Uncrustables
Smucker’s Uncrustables line, which is at 20% compound annual growth, is expected to reach $1 billion for the brand alone, Smucker said.
Uncrustables sales have tripled over the last year in the c-store channel and are in the top 10% of fastest-growing brands in dollars and units across all categories in convenience, according to Smucker.
“We expect to double the number of convenience stores we are already in over time with the success of grape and strawberry varieties,” he explained. “Over the last year, many of our current retailers are looking to add additional varieties.”
The company is reformulating the frozen sandwiches for longer shelf life and releasing the fridge-friendly Uncrustables in July, he said.
“They can still be kept in the freezer or now in the fridge for up to five days,” Smucker said. “This change makes it easy for more consumers to eat them more often. Based on in-home usage testing, as many as 50% of non-users are more likely to try them, and 72% of current users expect to buy more of them.”
Smucker also has launched its high-protein Uncrustables varieties, such as Up & Apple and Bright-Eyed Berry, to expand the brand to breakfast occasions, he said.
A leaner, meaner Hostess
Smucker’s focus on high-velocity brands has led to a 25% reduction in the company’s SKU count within its Hostess brand, Smucker said.
“The majority of this work is now complete, and we anticipate the benefits from operational efficiency and improved customer service to largely benefit next fiscal year,” he added.
The brand continues to face challenges, with comparable sales for sweet baked snacks dropping 3% in Smucker’s second fiscal quarter.
Smucker said the closure of its Indianapolis, Ind., manufacturing facility will save the company $30 million annually, and the food and beverage manufacturer is ramping down promotion of the product line.
“We have made the strategic decision to reduce promotional activity from January to the end of the fiscal year for the sweet baked snack segment as we work to improve our operations and evaluate where the greatest return on investment will be for the brand going forward,” he said.
Hostess brand donuts now represent about 40% of the segment sales for Smucker, he said.
Smucker is continuing to innovate within the brand, with the recent release of the Donettes Churro Mini Donuts.
