Smucker looks for boost in baking category

by Eric Schroeder
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BOSTON — While the U.S. retail coffee market commands the largest percentage of sales at the J.M. Smucker Co., the Orrville, Ohio-based company is taking action to boost other areas of its business with ties to grain-based foods, company executives said Sept. 8 at the Barclays Back-To-School Consumer Conference in Boston.
Specifically, the company is looking for ways to slow sales declines that have hurt results in the U.S. Retail Oils and Baking Market segment.

“Although we have been successful in growing our Crisco and Pillsbury businesses since acquiring them by focusing on new products and brand support, our oils and baking segment continues to be impacted in the most recent periods by aggressive pricing, which we expect to continue in the near term,” said Vince Byrd, president of the U.S. Retail Coffee Market segment. “Net sales have declined over the past two quarters by 12% and 11%, respectively.

“In the baking category, we are selectively promoting our products, but are doing so responsibly and with a long-term view of our brands and category in mind. We continue to focus on product innovation and recently introduced new varieties of Pillsbury cookies, brownies, cakes and frostings. Our recently launched sugar-free cake mix and frosting offerings have been well received. We are also in the process of launching new Pillsbury seasonal items with a Halloween theme.”

Smucker’s U.S. Retail Consumer Market segment, which accounts for approximately a quarter of total company sales and 28% of profit, has benefited from the national roll out of Smucker’s Snack’n Waffles, Mr. Byrd said.

“This hand-held Belgian-style waffle comes in four varieties and complements our Smucker’s Uncrustables ready-to-eat sandwiches,” he said. “Both of these offerings resonate well with our consumers who are focused on comfort and convenience.”

Beyond its brands, Smucker also has spent time and money investing in operations. Timothy Smucker, chairman and co-chief executive officer, said Smucker will invest $220 million in capital over the next three years to streamline the company’s coffee and fruit spreads supply chain while closing four existing manufacturing facilities.

“We will be breaking ground on our new Orrville, Ohio, facility in late October and expect to start-up operations during the summer of 2012,” Mr. Smucker said. “This plant will be our primary production facility for fruit spreads, ice cream toppings and syrups.

“We are also actively working toward the goal of expanding our coffee capacity in New Orleans and expect to complete these activities over the next two years. Overall, the project remains on time and on budget, and performance levels at all of these locations remain high.”

The initiative is expected to result in annual savings of $60 million when fully implemented, Mr. Smucker said.
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