The J. M. Smucker Company, established by Jerome Monroe Smucker in 1879 in Orville, Ohio, has remained a family-owned enterprise since its inception. Their success as pioneers in middle-of-the-store product items can be attributed to their strategy of market expansion, product innovation, and strategic acquisitions. To sustain this growth, the company is continuously introducing new offerings to consumers while maintaining their family-run nature.
Smuckers has adjusted its strategy numerous times over the course of 133 years in order to adapt to changing economies, products, and technologies. In order to remain competitive and current with its strategies, Smuckers must continue being a dominant force in the middle of the store. One key advantage that assists Smuckers in maintaining its supremacy is its extensive experience and widespread recognition. The company’s advertisement campaign, “With a name like Smuckers, it has to be good,” emphasizes two defining characteristics of the company.
The company’s distinguishing feature is its family-owned and operated nature, fostering a sense of affinity and familial connection for consumers. Moreover, its well-established name and brand further bolster the company’s standing. If your mother has been purchasing Smuckers jelly since your childhood, it is likely that you will continue to do so for your own child. In recent times, there has been an escalating worry about weight management and sugar consumption due to a notable rise in diabetes cases over the past three decades. Consequently, sugar intake has gained increased attention nationwide.
Smuckers offers a range of products, including fruit spreads, peanut butter, snacks and sandwiches, ice cream toppings, and specialty items. All these products contain sugar. Out of the 142 products that Smuckers produces (excluding Snack n Waffles due to lack of information), 123 have a significant amount of sugar per serving, while the remaining are sugar free. This could be problematic for Smuckers in the long run as there is a growing focus on weight management and adopting healthier lifestyles.
Smuckers has the opportunity to utilize their high sugar gram content per serving as an advantage by diversifying their product selection to offer additional tasty choices that are sugar-free. This approach would not only attract consumers who are mindful of their sugar consumption, but also aid in addressing the problem of excessive sugar intake. Additionally, since Smuckers aims to be a leading brand in the central section of grocery stores, they have the potential to introduce healthier alternatives and occupy more shelf space within this area. Alternatively, they could establish alliances with major retail supermarkets in order to promote these options beyond solely being available in the breakfast aisle.
Smuckers faces a significant challenge from the growing price competition in the supermarket industry. Supermarket chains can now market their own versions of products, similar to Smuckers’, but at lower prices. Consequently, Smuckers is forced to either lower its prices to compete or devise an alternative strategy to make the most of its current pricing. Additionally, the increasing presence of private label brands on the shelves poses as a threat for Smuckers.
This is a significant concern for Smuckers as having a well-positioned central store location with ample shelf space is crucial for effective advertising and ultimately influencing consumer purchasing decisions. The processed foods sector has experienced and continues to undergo transformations mainly driven by technology advancements and nationwide trends. Food companies heavily involved in processed foods must rival their competitors by implementing more automated and technologically advanced manufacturing operations. Through achieving greater automation in the manufacturing process, consumers are able to access healthier and more convenient options.
The processed food industry has undergone consolidation, with many companies now providing products to various entities like grocers, restaurants, cafeterias, schools, hospitals, and corporate facilities. A viable long-term strategy for Smuckers in this industry would involve consolidating with similar companies, thereby enhancing revenue and establishing a stronger foothold. In the short term, a three-year plan for Smuckers should include forming a strategic partnership with a major player in the retail grocery industry.
If Smuckers were to make a deal with Walmart, such as having their own breakfast aisle with all their products, it could significantly increase their profits. This is because there would be no competition at the market level for products like theirs. In the span of a year, Smuckers should analyze and create healthier and sugar-free options to add to their expanding product line. By introducing new products for health-conscious individuals, Smuckers can grow and generate more revenue by catering to consumer demands.
Smuckers has been successful in the processed food industry for a significant amount of time, mainly because of its family-oriented business operations and effective branding. The company’s strategies have evolved over time, but have mostly focused on acquisitions and establishing a strong presence in the middle of store section. By staying aware of social and economic changes within the country, Smuckers can ensure continued growth through strategic planning. This includes introducing new products that appeal to health-conscious consumers. Furthermore, considering a possible partnership with a major grocery retailer allows Smuckers to preserve its identity as a family-owned and operated enterprise.
The financial ratios for Smuckers and B & G Foods, Inc. are as follows:
- Current Ratio: Smuckers – 1.32 (2009), 2.56 (2010); B & G Foods, Inc. – 3.4 (2009), 3.5 (2010)
- Quick Ratio: Smuckers – 0.75 (2009), 1.19 (2010); B & G Foods, Inc. – 1.6 (2009), 1.2 (2010)
- Inventory to Net working Capital: Smuckers – 1.79(2009),0 .88(2010); B & G Foods, Inc.- 0 .74(2009) , 0 .48(2010)
- Net Profit Margin :Smuckers-7%(2009 ),11% (201O );B&G Foods ,Inc.-3 .5%(20Og ),6 .3 %(20IO )
- Return on Assets :Smuckers-3 .2 %(Zggg ),6 .2 °/(ZZlQ );B&G Foods ,Inc.-2 %(ZOOg ),3 .’7%(ZOIO )
- Return on Equity :Sm uck ers-5’4°/o(zogq ),q%(zogq );B&G Fo ods ,I nc.-7 ‘7%(‘(zoo q),(zo<>)
- *Note that the table is cut off here.
When comparing the two companies, it can be seen that Smuckers has strengths in their net profit margin and return on assets which indicates better cost control and higher income for each dollar of sales compared to B & G Foods, Inc.
Smuckers is financially weaker compared to their competitor B&G due to a significantly higher Fixed Asset turnover. This indicates that B&G has been more successful in utilizing their investment in fixed assets to generate income. However, when examining Smuckers and its financial analysis, it is evident that the company has consistently displayed strength and stability in its past and present undertakings.
References
Arvidson, E. (2012, 9 16). Food Process Industry Analysis. Retrieved from Ehow: http://www.ehow.com/facts_7387837_food-processing-industry-analysis.html B&B Food Inc. (2012, 9 20). Retrieved from Hoovers: http://www.hoovers.com/company/BG_Foods_Inc/jftchi-1-1nji3j-1njhft.tml Gamble, J. E. (2011). Smucker’s in 2011: Expanding the Business Lineup . In D. S. Professors, Business Policy BADM 485 Dickinson State University Department of Business &Management (pp. 441-454). Dickinson : McGraw Hill Create.
Gunther, M. (2010, August 4). Smucker’s Success: Keep it in the Family. Retrieved from CNN Money: http://money.cnn.com/2010/08/04/news/companies/smuckers_secret_to_success.fortune/index.htm Speculator, I. (2011, May 19). Dividend Analysis: The J. M. Smucker Company.
Retrieved from Seeking Alpha: http://seekingalpha.com/article/270881-dividend-analysis-the-j-m-smucker-company
