NEW YORK — While the J.M. Smucker Co. continues to work on restoring its margins, sales for fiscal 2022 totaled $8 billion with 71% of its portfolio growing or maintaining market share. In an investor day presentation on Dec. 14, Tucker Marshall, chief financial officer, said Smucker is aiming for fiscal 2023 net sales growth of 5.5% to 6.5% and adjusted earnings of $8.35 to $8.75 per share, a 2% increase from its previous guidance. The company’s goal is to become a top-quartile performer in the food industry, he said.
During the presentation, Smucker executives reiterated the company’s intention to grow three of its segments into billion-dollar businesses in the next few years: Uncrustables frozen sandwiches, Dunkin’ coffee and dog snacks.
Marshall underscored his financial priorities for the company, which included transparent communication, execution to credible financial targets, prioritization of the highest return opportunities, maintaining productivity, focused cost control and a balanced capital deployment model.
“These financial priorities, along with our portfolio reshape activities and strong execution, have allowed us to outperform our peers in the broader index over the last three years,” Marshall said. “As we move forward, our company has the potential to become a consistent top-quartile performer in total shareholder return in the food and beverage industry.”
According to the Grain-Based Foods Share Index calculated by Milling & Baking News, which includes companies with a significant grain-based foods business, Smucker was the 8th highest performer in 2021.
Smucker has streamlined its business with four divestitures over the last two years.
Marshall said the company is focusing on key enablers of top-line growth, including the Uncrustables brand, the coffee portfolio driven by Dunkin’ and Café Bustelo and pet snacks, driven by Milk-Bone.
In the US Retail Pet Foods business, the company projected growth of 4% to 6% over the next five years. Fiscal 2022 net sales for the company’s US Retail Pet Foods division totaled $2.8 billion. Pet snacks made up 33% of the segment’s total tales in fiscal 2022, with cat food accounting for 32% of sales and dog food accounting for 31%.
“We exited fiscal ‘22 at just north of $880 million on our [pet] snacks business,” said Robert Ferguson, senior vice president and general manager of pet food and pet snacks. “…We’ve grown that business 21% on a two-year stack. We have a market-leading position with 23% dollar share in the dog snack category and over 60% of dog-owning households treat with at least one of our brands.
“We want to continue our premium innovation launches as well as enter new subcategories… I’m very confident in our path to $1 billion,” he added “I’m not saying anything new today, but I’d like to push well beyond $1 billion on this dog snacks business.”
The company’s Milk-Bone brand is uniquely positioned to meet demand driven by pet humanization, according to the company. Smucker’s shared 21% of new dog treat buyers chose Milk-Bone over the last year, and 85% of younger consumers view themselves as a “dog parent.” Additionally, 86% of pet owners believe it is important to include their dog in holidays and special occasions, upping the ante for treating occasions.
The company also detailed growth in its cat food portfolio, with net sales growth seen in this category over 19 of the last 20 consecutive quarters. Meow Mix remains the No. 1 dry cat food brand on the market, according to Smucker’s, and the company plans to leverage its strong position in dry cat food to drive wet cat food sales going forward.
Smucker’s is also working to support its dog food brands by expanding offerings, fine-tuning formulations and streamlining certain assortments, including its Rachael Ray Nutrish line.
In the Consumer Foods business unit, Uncrustables stood out as a growth leader. In 2022 the brand held a 9% share of the frozen snacks and sandwiches retail category with a No. 1 velocity growth rate, No. 1 repeat rate and two of the top seven stock-keeping units (SKUs) in the frozen category, the company said.
“The Uncrustables brand is expected to account for greater than 1 percentage point of the total company’s growth rate as it continues on its path to reaching $1 billion in annual net sales and beyond,” Marshall said.
With recent portfolio reshaping moves and expanded production for its signature frozen sandwiches, the company said it plans for Uncrustables to make up 50% of net sales for its Consumer Foods business in the next five years.
Nationwide supply of Jif peanut butter made a full recovery from the recall in May due to potential Salmonella Senftenberg contamination.
“Jif is back on shelf,” said Tina Floyd, senior vice president and general manager of Consumer Foods. “We are producing our entire portfolio of SKUs. We’ve returned to share leadership in both dollars and in volume … We did not lose any distribution at all. And the brand is as strong as what it was pre recall.”
In the Coffee segment, the company said it plans to be at the center of the “evolving coffee market” as the No.1 branded at-home coffee manufacturer in the United States. Smucker’s 2022 coffee portfolio commanded a 26% share of the at-home coffee market with three of the top eight coffee brands.
Joseph Stanziano, senior vice president and general manager of Coffee, said performance of the Dunkin’ brand has been “tremendous.”
“Under the Smucker ownership, the brand has more than tripled, and it is accelerating growth,” Stanziano said. “Just in the last three years, we’ve added almost $200 million in revenue. That’s the equivalent of adding a top-10 brand in the category.
“So, as we think about the path to $1 billion, we think there’s multiple opportunities to get there.”
The company unveiled plans to launch Dunkin’ in liquid concentrates in the spring.
Café Bustelo grew 21% in 2022, gaining the most dollar share in the category and ending the year as the No. 1 espresso and No. 1 Latin coffee, according to Smucker. The brand is “well-positioned with consumer’s preferences, with the goal to become the Latin coffee authority across all formats in the US,” the company said.
Mark Smucker, president and chief executive officer, said the company’s roadmap will encompass five components: driving best-in-class execution, improving profitability and cost discipline, transforming the portfolio, nurturing and investing in the culture and improving diversity to foster inclusion and equity.
With 7,000 employees engaged in a new bottoms-up approach through the new transformation office, Smucker said its people are the company’s most valuable asset.
“In the past, we deployed cost savings targets in a top-down manner, with specific targets segregated by functional area or business,” said Amy Held, chief transformation officer. “While we achieved our goals, we solved them in silos.
“Today, we are taking a fundamentally different approach, one that is bottoms up, fully cross-functional and driven by the ideation of those closest to the work, closest to the value-creation opportunities. We are mobilizing the entire organization, engaging at a level deeper and broader than ever before to drive change and efficiency every day.”
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