Smucker sees innovation, acquisition keys to growth

by Eric Schroeder
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BOSTON — The J.M. Smucker Co. expects to achieve balanced growth in three ways: by increasing market share in categories it already competes; by introducing innovative products; and by acquiring new food companies that fit the company’s acquisition strategy.

Behind that strategy, Richard Smucker, executive chairman and co-chief executive officer of Smucker, believes the Orrville, Ohio-based company will be able to increase sales 6% per year over the long term.

Mr. Smucker delivered his outlook for the company as part of the Lehman Brothers Back-to-School Consumer Conference held Sept. 3 in Boston.

"We expect organic growth, including new products, will contribute 3% to 4% per year and acquisitions will account for the remainder," Mr. Smucker said. "Year to year, the contributions from acquisitions will vary. We seek to leverage the 6% sales growth and operating efficiencies with operating efficiencies and debt reduction, along with share repurchases over the long term."

Mr. Smucker said the company has set a long-term goal of earnings per share growth of more than 8% on an earnings increase of about 8% per year.

Looking at the company’s baking operations, Mr. Smucker said Smucker has been proactive in building the Pillsbury brand by "expanding its relevancy to consumers and bringing incremental consumers to the category."

"We were the first to market a reduced-sugar version of our cake, brownie and frosting offerings," he said. "We have also made in-roads in share of market, particularly in frostings, where we have moved solidly into the No. 2 position nationally and hold the No. 1 position in 17 regional markets."

Smucker also continues to experience strong demand for its Uncrustables sandwiches.

"Last year we introduced whole wheat Smucker Uncrustables in strawberry and grape varieties, offering our consumers the benefit of whole wheat and broadening the presence in the frozen aisle," Mr. Smucker said. "We were very pleased that Smucker’s Uncrustables reached a very key milestone, achieving $120 million in sales this fiscal year."

Updating analysts on the pending acquisition of Folgers, Vince Byrd, president of Coffee Market for Smucker, said that while the merger will make coffee the largest category for Smucker it also will open the door for growth in other categories.

"Folgers, Dunkin’ Donuts and Millstone provide leadership in another key area: center aisle," Mr. Byrd said. "This is important as it allows us to leverage our brands and our go-to-market strategy, including our sales and distribution network. It is also important to the retailer, since it’s the center of the store that drives retailer profits."

The Folgers acquisition is expected to close in the fourth quarter.

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