BOCA RATON, FLA. – The J.M. Smucker Co. previewed several new products that will be introduced in the coming years during the company’s presentation at the Consumer Analyst Group of New York (CAGNY) conference on Feb. 20. The new products are reflective of management’s focus to spur top-line growth through innovation.
“We have transformed our innovation and marketing organizations to be more agile and evolve with the consumer landscape,” said Mark. T. Smucker, president and chief executive officer. “We have built new capabilities and consumer insights and data, reorganized our teams, expanded our omni-channel focus and realigned agency relationships. With an increased focus on consumer preferences, we are better equipped to anticipate and shift to changing demand.”
Innovation on tap from the company reflects the shift in changing demand. In fiscal 2020, Smucker’s Coffee business will introduce Dunkin’ Signature Series, a new line of coffees that will have a premium positioning in the category.
“We are also launching Dunkin’ Hot Chocolate, our first entry into the growing K-Cup portion of the $360 million hot chocolate segment with the strength of the Dunkin’ brand,” Mr. Smucker said. “Also, in 2020, we are launching our first ever single-serve Espresso Pods across multiple brands. Single-serve espresso machines have grown to a 4% household penetration, and we are excited to be an early participant in this growth segment. Our initial distribution will be primarily online.”
Mr. Smucker called the company’s PowerUps brand introduction in 2018 “one of the most successful launches in the crowded bar space in several years.”
Next fiscal year the company plans to expand PowerUps into several adjacent categories, including soft baked bars and stacked bars.
In fruit spreads, Smucker plans to bring additional clean label and flavorful options to market. Under the Smucker’s brand, spread items will feature new packaging and formulations that are perceived as clean and simple. A new line that will be introduced is called Mosaics.
“(Mosaics) combines both unique and familiar fruits with real sugar and no artificial preservatives or colors,” Mr. Smucker said. “Our research uncovered an unmet desire for new flavors in the fruit spreads category, and Mosaics leverages this whitespace opportunity.”
Mark. R. Belgya, vice-chair and chief financial officer, said the marketing required to successfully launch innovation combined with lost sales due to the divestment of Smucker’s baking business this past August will be headwinds and impact adjusted earnings per share (e.p.s.) in fiscal 2019.
“However, as innovation gains footing and moves toward run rate margins and our financial leverage is reduced, we see a clear path to achieve our targeted growth rate at both operating income and adjusted earnings per share,” he said.
Mr. Belgya did confirm guidance that Smucker’s full year fiscal 2019 adjusted e.p.s. will fall in the range of $8 to $8.20.
Divestment of the baking business also is expected to be a drag on fiscal 2020 earnings.
“With the sale completed this past August, we will lose four months of sales and profits next year,” Mr. Belgya said.
Private label competition in peanut butter also will be a headwind in fiscal 2020, according to the company.
“Along with anticipated lower peanut cost, we announced a price decline on peanut butter for (the) Jif brand effective in March that will not be fully offset by lower input cost or anticipated volume gains,” the company said. “Ten months of this price cost relationship will impact us in fiscal 2020.”
The J.M. Smucker Co. will issue its earning for the third quarter of fiscal 2019 on Feb. 26.