Brief

Sales are down, but Smucker's says it's not in a jam

Dive Brief:

  • The J.M. Smucker Company saw a 5% decrease in net sales to $1.878 billion during the third quarter of its 2017 fiscal year compared to the year-ago period, according to the company's earnings report. Once the loss from the finalized divestment of its Eagle Milk and private label canned and condensed milk products are removed from the earnings, the sales decrease goes down to 3%.
  • Gross profits were down 5% to $40.9 million. The report indicates this comes as a result of changes to volume and mix, as well as the loss of the canned milk business. The company saw big declines in coffee — with sales slipping 7% — and pet food, which posted a decrease in sales of 4%.
  • "Accelerating the realization of synergies and a concentrated effort to reduce costs across the Company support our ability to deliver bottom-line growth, despite the top-line softness in our business and across the industry," CEO Mark Smucker said in a statement.

Dive Insight:

Fewer consumers are finding the best part of waking up to be Folger's coffee in their cup, with the J.M. Smucker Company attributing declines in the coffee segment to that legacy brand. But the company that made its name on jam and spreads hasn't put all its beans in one cup: Its more premium coffee brands, including Dunkin' Donuts and Cafe Bustelo, both posted gains during the quarter. While Dunkin' Donuts popularity as a coffee brand is building — even establishing itself as a Pop-Tarts filling — coffee may become an even trickier segment for food manufacturers in the future. Adverse weather conditions in coffee-growing areas in Vietnam and Brazil could negatively impact the market in months to come.

However, Smucker's bread-and-butter — or, in this case, peanut butter and jelly — appears poised to improve. Last month, the company announced a new factory is coming online to double the manufacturing capacity of its popular Uncrustables sandwich line. According to the company, sales of the frozen peanut butter and jelly sandwiches have increased nearly 2,000% since 2000, and were worth around $200 million in 2016.

Other initiatives may help the company's bottom line in the future. Smucker's new Nature's Recipe pet food was recently launched — and although there's steep competition in that segment from Mars and Nestle, Smucker's new brand touts real and healthy ingredients. This aligns with the trend of shoppers looking for pet foods with premium ingredients for their furry companions.

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Filed Under: Manufacturing Corporate
Top image credit: PR Newswire