Smucker sees record new products in 2013
by Eric Schroeder
BOSTON — With a record number of new products slated for introduction during fiscal 2013, J.M. Smucker Co. is focused on driving excitement to the center of the store, Vince Byrd, chief operating officer, told analysts at the Barclays Back to School Conference held Sept. 5 in Boston.
New products — approximately 100 in all — are expected in Smucker’s line of single-serve coffee, baking, hazelnut spreads and seasonal items. Mr. Byrd said the introduction of Folgers K-Cups this past year was the most successful new product in the company’s history, and Smucker plans to build on that success with the launch of two new items in the United States. In addition to K-Cups, Smucker has new items in store in both the premium and instant coffee segments.
Mr. Byrd also said Smucker is excited about the launch of Jif hazelnut spreads.
“Just for perspective, the (spreads) category represents about $275 million in sales,” he said. “It’s grown nearly 50% over the last 52-week period, and actually has grown significantly more than that in the last 12-week period, which has been fueled by our launch.”
Beyond new product introductions, Smucker is focused on pricing leadership, or as company executives described it, “sharpening our price points.”
“Specifically, it might be enhancing our merchandising support, as we have done in coffee or in baking,” Mr. Byrd said. “It might be expanding our opening price point offerings, as we have done, again, in coffee or in the baking category. It might be passing through commodity cost decreases that we’ve had which, again, happened in the first quarter with coffee with the price decline in May. Or, quite frankly, it might be just being more competitive on shelf and closing those gaps versus our key competitors, as we did with milk last month by taking a 10% decrease. So that’s what we’re referring to when we’re talking about being more aggressive on our pricing.”
Mark Belgya, senior vice-president and chief financial officer, said several supply chain initiatives are progressing well, including the transition to a new Orville, Ohio, manufacturing facility that opened in July. The transition is expected to take about a year, he said.
Additionally, Smucker is nearly finished with a $70 million expansion effort of two coffee facilities in New Orleans that was announced two years ago. The company also has delayed the closing of its Memphis, Tenn., facility as it continues to run a piece of its portion-control business and industrial fruit spreads operation there.
“Our overall savings projections continue on track to see $70 million by fiscal 2015,” Mr. Belgya said. “Of course, our intent is that some of these savings will contribute to future gross margin growth.”