BOCA RATON, FLA. — Buoyed by a long track record of impressive growth, sales of Uncrustables will reach half a billion dollars in the years to come, said Mark T. Smucker, president and chief executive officer of The J.M. Smucker Co., Orrville, Ohio.
Speaking Feb. 22 at the Consumer Analyst Group of New York annual conference, Mr. Smucker described Uncrustables as the anchor of the J.M. Smucker snacking business. He spoke one day after the company announced third-quarter earnings for the period ended Jan. 31 were down 27% from the same period in fiscal 2016.
|Mark Smucker, president and c.e.o. of The J.M. Smucker Co.|
Defining snack foods as products that are convenient, suitable for on-the-go eating and requiring low preparation, Mr. Smucker said Smucker snacking sales currently total $310 million annually across all of the company’s categories. Snack foods have enjoyed 15% compound annual growth over the last five years.
Uncrustables account for more than 70% of the Smucker snacking sales, reaching $220 million over the past year, including food service sales, and enjoying 17% five-year compound annual growth.
To sustain growth ahead, Smucker will be converting the entire line to non-G.M.O. and will be eliminating high-fructose corn syrup.
Additionally, the company recently announced plans to build a new Uncrustables manufacturing facility in Longmont, Colo., near Denver. The plant will have capacity to produce 2 million Uncrustables per day, similar to the capacity of the company’s Scottsville, Ky., plant.
Mr. Smucker said Uncrustables have a current household penetration of 7%, giving him confidence in the brand’s growth potential.
Across its entire portfolio of products, Smucker has 93% household penetration, and Mr. Smucker, who became president and c.e.o. in June 2016, began his presentation with an expansive look at Smucker and its track record of growth.
Over the past 15 years, the company has enjoyed compound annual growth (CAGR) of 18% in sales, 12% in earnings per share, 21% in market capitalization and 12% in total shareholder return.
The company has leading market shares in coffee (27%), fruit spreads (45%) and nut butters (37%).
Looking forward, Mr. Smucker said Smucker is pursuing growth through launching new platforms that “extend the strength of our iconic brands.”
He said the company has a track record of success with new products, noting that those introduced in the past three years will account for 9% of fiscal year 2017 sales (year ending April 30).
E-commerce represents another important avenue for growth, Mr. Smucker said. He suggested both coffee and pet foods are well suited for on-line subscription models and that e-commerce will account for 15% of Natural Balance pet food total sales in fiscal 2017, up 60% from the year before.
He also described data-driven analytics as important for driving new product development. For example, consumer insights from these efforts led Smucker to introduce a new larger Folgers canister at a key retailer. The product has become a top seller, Mr. Smucker said.
He divided the U.S. retail business into three platforms of essentially like-sized units of $2.1 billion to $2.2 billion in annual sales apiece — coffee, consumer foods and pet foods. The products account for more than 75% of Smucker sales and profits annually.
Within consumer foods, in addition to Uncrustables, Mr. Smucker said the Jif brand has growth potential. He said Jif is a brand that resonates with consumers beyond peanut butter in a jar, he said.
Jif snack bars have enjoyed rapid growth, up 32% in the latest 12-week period, boosted by investments in new flavors. More innovation should be anticipated, Mr. Smucker said.
Jif To Go sales are up 5% this year, and the Jif brand will be launched shortly in Canada. He said per capita consumption of peanut butter in Canada is among the highest in the world.
While unable to share details, Mr. Smucker said the company has crafted a roadmap for growth in the coffee business. It was weakness in the coffee business that pressured profits in the company’s latest financial report.
“We expect to be a leader in driving continued category growth,” he said.
Near-term introductions will include Folgers Simply Gourmet, a premium coffee brand, and, this summer, Dunkin’ Donuts cold brew kit. Mr. Smucker said Folgers remains the favorite at-home mainstream brand by a wide margin.
“We remain committed to innovating while preserving the authenticity” of this American brand with roots dating back to the 1850s, Mr. Smucker said.
He said the company is looking at ways to tap more deeply into consumer appreciation for this rich history.
Turning to Dunkin’ Donuts, Mr. Smucker said the brand is the top selling stock-keeping unit in the K-cup space and is the No. 2 premium coffee brand with a 15% dollar share.
Café Bustelo, acquired in 2011, continues to gain market share, Mr. Smucker said. The brand has enjoyed 11% CAGR sales growth since 2011 with sales in 2017 expected to reach $130 million.Mr. Smucker said the brand resonates with core Hispanic demographic and “millennials who appreciate its authenticity.”