Smuckers Strategy Case

I. INTRODUCTION

In 2010, J. M. Smucker Company (Smucker’s) is one of the major companies in the processed food industry across North America (USA, Canada and Mexico). Although Smucker’s historically operated as a producer of jams, jellies and preserves, with the rapid expansion in the last decade, it has transformed itself into a leading company in areas such as coffee, canned milk, oils, baking mixes, juices, beverages and frozen sandwich markets.

As a family-run business, Smucker’s was founded by Jerome Monroe Smucker in 1879. After being highly successful selling apple butter, Smucker’s started selling products of jams, jellies and preserves. In 1959, the company went public under the management of Jerome Monroe Smucker’s grandson, Paul Smucker. The Company made a lot of acquisitions until 2001 but even with these acquisitions, the company yielded only $651 million annual sales in 2001, which was dwarfed by its rivals such as Nestle with $61.3 billion annual sales or Unilever with 51.5 billion euros. After that, the company began making larger acquisitions, focusing on well-known brands. In 2002, Smucker’s acquired brands Jif and Crisco from P&G in exchange for $786 million stock swap. In 2004 it acquired International Multifoods with Pillsbury and Hungry Jack brands for $840 million. This trend accelerated with acquisitions of White Lily Foods in 2006, Eagle Family Foods in 2007, Knott’s Berry Farm jams, jellies and preserves in 2008. Also, in the same year the company made its largest acquisition when it purchased Folgers coffee from P&G for $3.7 billion.

II. SMUCKER’S CURRENT STRATEGIC MANAGEMENT STEPS

A. Objective, Analysis, and Strategy Formation

Given the fact that sales of the company were much less than its rivals’ sales and it was hard to change status quo for sales in the near future, the company didn’t have the same playing field with its rivals. This puts it at very disadvantageous position compared to some of its main rivals. Thus, as a main objective, Smucker’s has constantly strived for rapid growth in the past decade. Furthermore, developments and trends such as a slow growth rate, consolidation in the supermarket industry and growing price competition forced the processed food manufacturers to decrease their profit margins along with market share.

Smucker’s came up with a brand-driven strategy in order to address these issues, and since then, it has endeavored to own and market number one food brands in North America that sold in the center of the stores, which was dominated by well-known processed foods brands. The company’s core strategy has three legs. First, it tries to boost the growth rate in existing brands through commercials and promotions. Second, it tries to introduce new products, which have potential to become a brand name. Third, it is growing