BOCA RATON, FLA. — A primary topic discussed at this year’s Consumer Analyst Group of New York (CAGNY) conference taking place Feb. 21 – 24 in Boca Raton is where will consumer packaged goods companies find growth opportunities in this high inflation and value-focused environment? For the J.M. Smucker Co., Orrville, Ohio, the answer is pet snacks, Uncrustables and cold coffee.
Earlier this month, Smucker sold several pet food brands to Post Holdings, Inc., St. Louis, for approximately $1.2 billion. The company plans to shift the resources supporting the divested business to bolster its position in pet snacks.
“The business will shift from approximately two-thirds pet food and one-third pet snacks to approximately 60% pet snacks and 40% cat food, which significantly improves the profit margin and product mix,” said Mark T. Smucker, chairman, president and chief executive officer, during a Feb. 22 presentation at CAGNY.
Smucker, through the Milk-Bone brand, is the market leader in dog snacks with 23% dollar share, said Mr. Smucker. The business has delivered year-over-year net sales growth in 16 of the last 18 quarters and it is anticipated the company’s dog snacks portfolio will grow to $1 billion in annual net sales over the next several years.
“To achieve this growth, we will first expand our leadership and leverage our strength in the biscuits and soft and chewy segments through our core offerings and close in innovation,” Mr. Smucker said. “And second, continue to build a meaningful presence in long-lasting chews and rawhide alternative segments.
“We plan to achieve this by driving relevance, awareness and ultimately demand with breakthrough marketing and engagement with younger consumers to build brand loyalty, expanding seasonal and special occasion offerings by inspiring shoppers to celebrate their pets to drive impulse purchases and household penetration, elevating core offerings by optimizing assortment and igniting innovation through white space opportunities and increasing dollars per buyer and per treat occasion with premium offerings.”
Smucker has capitalized on the after-effects of the COVID-19 pandemic and more consumers drinking coffee at home.
“At-home coffee consumption remained strong, representing 71% of all coffee drinking occasions as consumer habits formed over the past three years continue to endure and are expected to drive category momentum for years to come,” Mr. Smucker said.
To propel future growth of the coffee business, Smucker plans to offer consumers both hot and cold formats.
“… We see growth potential in cold coffee and we continue to innovate to meet consumers' desire for cold coffee at home,” Mr. Smucker said. “In addition to our existing Dunkin’ Cold offerings in both K-Cup and prepacked ground, we are expanding into new formats.
“This includes the launch of a single-serve no Brew Dunkin' Cold coffee powder, which is crafted to dissolve in cold water and our expansion into Dunkin' Cold concentrates with more innovation to come. We anticipate Dunkin’ becoming a $1 billion brand within the next four years expanding on our expected sales of approximately $850 million this fiscal year.”
Smucker’s commitment to growing its Uncrustables platform has been well documented. With new manufacturing capacity coming online, management sees a runway for the brand to generate $1 billion in sales by fiscal 2026.
“We are confident the brand can deliver continued double-digit net sales growth over the next several years,” Mr. Smucker said. “We expect over $100 million of net sales growth for the brand in each of the next three fiscal years, which will generate over 1% of total company top-line growth.“Future plans also include expanding the famous circular, no crust crimp sandwich beyond its current varieties. We expect approximately 50% of net sales for the Consumer business (unit) will be generated from Uncrustable sandwiches within the next five years, which will also support margin expansion for the segment and company.”