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Category: JM Smucker
Date: 29 December 2020 Stock price of JM Smucker (SJM): $116.33 In this article we take a more detailed look at J.M Smucker (SJM). The company owns a balanced portfolio of leading and emerging, on-trend brands spans pet food and pet snacks, coffee, and consumer food and natural beverage
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Our principal products as of April 30, 2020, are coffee, dog food, cat food, pet snacks, peanut butter, fruit spreads, frozen handheld products, shortening and oils, portion control products, juices and beverages, and baking mixes and ingredients "
More About J.M Smucker
The J.M. Smucker Company is an iconic American company founded in 1897. Guided by a vision to engage, delight, and inspire consumers through trusted food and beverage brands that bring joy throughout their lives, Smucker has grown to be a well-respected North American marketer and manufacturer. Our balanced portfolio of leading and emerging, on-trend brands spans pet food and pet snacks, coffee, and consumer food and natural beverage.
For more than 120 years, our Company has remained under the constant leadership of our founding family – the Smucker’s. We are proud to have fostered success through five generations of family leadership by focusing on long-term growth and embracing a foundation of strong principles and clear communication.
Today, the Company remains rooted in our Basic Beliefs of Quality, People, Ethics, Growth, and Independence established by our founder and namesake, Jerome Monroe (J.M.) Smucker, more than a century ago. We strongly believe that our unique culture is foundational to our Company’s success and the sustained passion of our employees. When we talk about our culture, we are referring to an environment that engages our employees, inspires passion for our brands, and makes people proud to work here — an atmosphere where everyone makes a difference.
Some of the group's brands include:
For more than 120 years, our Company has remained under the constant leadership of our founding family – the Smucker’s. We are proud to have fostered success through five generations of family leadership by focusing on long-term growth and embracing a foundation of strong principles and clear communication.
Today, the Company remains rooted in our Basic Beliefs of Quality, People, Ethics, Growth, and Independence established by our founder and namesake, Jerome Monroe (J.M.) Smucker, more than a century ago. We strongly believe that our unique culture is foundational to our Company’s success and the sustained passion of our employees. When we talk about our culture, we are referring to an environment that engages our employees, inspires passion for our brands, and makes people proud to work here — an atmosphere where everyone makes a difference.
Some of the group's brands include:
- Crosse & Blackwell
- Adams
- Knotts
- Tru Roots Organic
- Santa Cruz Organic
- Sahale Snacks
Principal products of J.M Smucker
Our principal products as of April 30, 2020, are coffee, dog food, cat food, pet snacks, peanut butter, fruit spreads, frozen handheld products, shortening and oils, portion control products, juices and beverages, and baking mixes and ingredients. Product sales information for the years 2020, 2019, and 2018 is included within Note 5: Reportable Segments. In the U.S. retail market segments, our products are primarily sold through a combination of direct sales and brokers to food retailers, club stores, discount and dollar stores, food wholesalers, online retailers, pet specialty stores, natural foods stores and distributors, drug stores, military commissaries, and mass merchandisers. In the International and Away From Home segment, our products are distributed domestically and in foreign countries through retail channels and foodservice distributors and operators (e.g., health care operators, restaurants, lodging, hospitality, offices, K-12, colleges and universities, and convenience stores).
Sources and availability of raw materials for J.M Smucker
The raw materials used in each of our segments are primarily commodities and agricultural-based products. Green coffee, peanuts, animal protein meals, oils and fats, sweeteners, grains, fruit, and other ingredients are obtained from various suppliers. The availability, quality, and costs of many of these commodities have fluctuated, and may continue to fluctuate, over time. Basis, futures, options, and fixed price contracts are used to manage price volatility for a significant portion of our commodity costs. Green coffee, along with certain other raw materials, is sourced solely from foreign countries and its supply and price is subject to high volatility due to factors such as weather, global supply and demand, plant disease, investor speculation, and political and economic conditions in the source countries. We source peanuts, animal protein meals, and oils and fats mainly from North America. The principal packaging materials we use are plastic, glass, metal cans, caps, carton board, and corrugate. For additional information on the commodities we purchase, see “Commodities Overview” within Management’s Discussion and Analysis of Financial Condition and Results of Operations. Raw materials are generally available from numerous sources, although we have elected to source certain plastic packaging materials from single sources of supply pursuant to long-term contracts. While availability may vary year-to-year, we believe that we will continue to obtain adequate supplies and that alternatives to single-sourced materials are available. We have not historically encountered significant shortages of key raw materials. We consider our relationships with key raw material suppliers to be in good standing.
Trademarks and Patents of J.M Smucker
Our products are produced under certain patents and marketed under trademarks owned or licensed by us or one of our subsidiaries. Our major trademarks as of April 30, 2020, are listed below
Dunkin’ and Dunkin’ Donuts are trademarks of DD IP Holder LLC used under two licenses (the “Dunkin’ Licenses”) for packaged coffee products, including K-Cup® pods, sold in retail channels such as grocery stores, mass merchandisers, club stores, and drug stores. All references to Dunkin’ in this Annual Report on Form 10-K are deemed to include the Dunkin’ and Dunkin’ Donuts trademarks. The Dunkin’ Licenses do not pertain to Dunkin’ coffee or other products for sale in Dunkin’ restaurants. The terms of the Dunkin’ Licenses include the payment of royalties to an affiliate of DD IP Holder LLC and other financial commitments by the Company. The Dunkin’ Licenses are in effect until January 1, 2039. We utilize Rachael Ray’s image and likeness and related Rachael Ray trademarks for premium pet food and pet snacks under an exclusive license which expires in 2063. The terms of the license include the payment of royalties to The Rachael Ray Foundation. Rachael Ray is a trademark of Ray Marks II LLC. Keurig® and K-Cup® are trademarks of Keurig Green Mountain, Inc. (“Keurig”), used with permission. In addition, we and our subsidiaries license the use of several other trademarks, none of which are individually material to our business. Slogans or designs considered to be important trademarks include, without limitation,
“With A Name Like Smucker’s, It Has To Be Good®,” “The Best Part of Wakin’ Up Is Folgers In Your Cup®,” “Choosy Moms Choose Jif®,” “Purely The Finest®,” “The Only One Cats Ask For By Name®,” “Say It With Milk-Bone®,” the Smucker’s banner, the Crock Jar shape, the Gingham design, the Jif Color Banner design, the Folgers Mountain Sunrise design, and the Smucker’s Strawberry, Milk-Bone, and 9Lives logos. We own several hundred patents worldwide in addition to proprietary trade secrets, technology, know-how processes, and other intellectual property rights that are not registered. We consider all of our owned and licensed intellectual property, taken as a whole, to be essential to our business.
- U.S. Retail Pet Foods: Rachael Ray® Nutrish®, Meow Mix®, Milk-Bone®, Kibbles ‘n Bits®, 9Lives®, Natural Balance®, Pup-Peroni®, and Nature’s Recipe® U.S. Retail Coffee: Folgers®, Dunkin’ Donuts®, and Café Bustelo®
- U.S. Retail Consumer Foods: Jif®,, Smucker’s®, Uncrustables®, and Crisco®
- International and Away From Home: Folgers and Smucker’s
Dunkin’ and Dunkin’ Donuts are trademarks of DD IP Holder LLC used under two licenses (the “Dunkin’ Licenses”) for packaged coffee products, including K-Cup® pods, sold in retail channels such as grocery stores, mass merchandisers, club stores, and drug stores. All references to Dunkin’ in this Annual Report on Form 10-K are deemed to include the Dunkin’ and Dunkin’ Donuts trademarks. The Dunkin’ Licenses do not pertain to Dunkin’ coffee or other products for sale in Dunkin’ restaurants. The terms of the Dunkin’ Licenses include the payment of royalties to an affiliate of DD IP Holder LLC and other financial commitments by the Company. The Dunkin’ Licenses are in effect until January 1, 2039. We utilize Rachael Ray’s image and likeness and related Rachael Ray trademarks for premium pet food and pet snacks under an exclusive license which expires in 2063. The terms of the license include the payment of royalties to The Rachael Ray Foundation. Rachael Ray is a trademark of Ray Marks II LLC. Keurig® and K-Cup® are trademarks of Keurig Green Mountain, Inc. (“Keurig”), used with permission. In addition, we and our subsidiaries license the use of several other trademarks, none of which are individually material to our business. Slogans or designs considered to be important trademarks include, without limitation,
“With A Name Like Smucker’s, It Has To Be Good®,” “The Best Part of Wakin’ Up Is Folgers In Your Cup®,” “Choosy Moms Choose Jif®,” “Purely The Finest®,” “The Only One Cats Ask For By Name®,” “Say It With Milk-Bone®,” the Smucker’s banner, the Crock Jar shape, the Gingham design, the Jif Color Banner design, the Folgers Mountain Sunrise design, and the Smucker’s Strawberry, Milk-Bone, and 9Lives logos. We own several hundred patents worldwide in addition to proprietary trade secrets, technology, know-how processes, and other intellectual property rights that are not registered. We consider all of our owned and licensed intellectual property, taken as a whole, to be essential to our business.
Seasonality of J.M Smucker earnings
The U.S. Retail Coffee and U.S. Retail Consumer Foods segments have historically been seasonal around the Fall Bake and Holiday period, which generally resulted in higher sales and profits in our second and third quarters. Our success in promoting and merchandising our coffee and baking brands during the Fall Bake and Holiday period has typically had a significant impact on our results for a fiscal year. Additionally, the Back to School period and the Spring Holiday season are important promotional periods. However, as a result of the U.S. baking business divestiture during 2019, the U.S. Retail Consumer Foods segment has experienced less seasonality. Additionally, the U.S. Retail Pet Foods segment, which grew during 2019 as a result of the Ainsworth acquisition, does not experience significant seasonality, further reducing the overall impact of seasonality to the total Company
Working capital requirements of J.M Smucker
Working capital requirements have historically been greatest during the first half of our fiscal year mainly due to the timing of the buildup of coffee, shortening and oils, and baking inventories necessary to support the Fall Bake and Holiday period and the additional buildup of coffee inventory in advance of the Atlantic hurricane season. The impact of seasonality on our overall working capital requirements has been partially reduced by the U.S. Retail Pet Foods segment, which does not experience significant seasonality. The divestiture of the U.S. baking business and the acquisition of Ainsworth during 2019 have further reduced the seasonality of our overall working capital requirements
Customers of J.M Smucker
Sales to Walmart Inc. and subsidiaries amounted to 32 percent, 32 percent, and 31 percent of net sales in 2020, 2019, and 2018, respectively. These sales are primarily included in the U.S. retail market segments. No other customer exceeded 10 percent of net sales during 2020, 2019, or 2018. During 2020, our top 10 customers, collectively, accounted for approximately 60 percent of consolidated net sales. Supermarkets, warehouse clubs, and food distributors continue to consolidate, and we expect that a significant portion of our revenues will continue to be derived from a limited number of customers. Although the loss of any large customer for an extended length of time could negatively impact our sales and profits, we do not anticipate that this will occur to a significant extent due to strong consumer demand for our brands.
Orders of J.M Smucker
Generally, orders are filled within a few days of receipt, and the backlog of unfilled orders at any particular time has not been material on a historical basis.
Competition of J.M Smucker
We are the branded market leader in the coffee, dog snacks, peanut butter, fruit spreads, natural shelf stable juices, ice cream toppings, and shortening categories in the U.S. In Canada, we are the branded market leader in the flour, pickles, fruit spreads, canned milk, shortening, and ice cream toppings categories. Our business is highly competitive as all of our brands compete for retail shelf space with other branded products as well as private label products. In order to remain competitive, companies in the food industry need to consider emerging consumer preferences, technological advances, product and packaging innovations, and the growth of certain retail channels, such as the e-commerce market. The primary ways in which products and brands are distinguished are brand recognition, product quality, price, packaging, new product introductions, nutritional value, convenience, advertising, promotion, and the ability to identify and satisfy consumer preferences. Positive factors pertaining to our competitive position include well-recognized brands, high-quality products, consumer trust, experienced brand and category management, a single national grocery broker in the U.S., varied product offerings, product innovation, good customer service, and an integrated distribution network. The packaged foods industry has been challenged by a general decline in sales volume in the center of the store.
Certain evolving consumer trends have contributed to the decline, such as a heightened focus on health and wellness, an increased desire for fresh foods, and the growing impact of social media and e-commerce on consumer behavior. To address these dynamics, we continue to focus on innovation with an increased emphasis on products that satisfy evolving consumer trends. In addition, private label continues to be a competitor in many of the categories in which we compete, partially due to improvements in private label quality and the increased emphasis of store brands by retailers in an effort to cultivate customer loyalty. In our total U.S. retail categories, private label held a 16.4 dollar average market share during the 52 weeks ended April 19, 2020, as compared to a 16.6 dollar average market share during the same period in the prior year. We believe that both private label and leading brands play an important role in the categories in which we compete, appealing to different consumer segments. We closely monitor the price gap, or price premium, between our brands and private label brands, with the view that value is about more than price and the expectation that number one brands will continue to be an integral part of consumers’ shopping baskets.
Certain evolving consumer trends have contributed to the decline, such as a heightened focus on health and wellness, an increased desire for fresh foods, and the growing impact of social media and e-commerce on consumer behavior. To address these dynamics, we continue to focus on innovation with an increased emphasis on products that satisfy evolving consumer trends. In addition, private label continues to be a competitor in many of the categories in which we compete, partially due to improvements in private label quality and the increased emphasis of store brands by retailers in an effort to cultivate customer loyalty. In our total U.S. retail categories, private label held a 16.4 dollar average market share during the 52 weeks ended April 19, 2020, as compared to a 16.6 dollar average market share during the same period in the prior year. We believe that both private label and leading brands play an important role in the categories in which we compete, appealing to different consumer segments. We closely monitor the price gap, or price premium, between our brands and private label brands, with the view that value is about more than price and the expectation that number one brands will continue to be an integral part of consumers’ shopping baskets.
Employees of J.M Smucker
At April 30, 2020, we had approximately 7,300 full-time employees worldwide, of which 24 percent, located at nine manufacturing locations, are covered by union contracts. These contracts vary in term depending on location, with two contracts expiring in 2021, representing 2 percent of our total employees. We believe our relations with our employees are good
J.M Smucker (SJM) stock price history over the last 5 years
The image below shows the stock price history of J.M Smucker (SJM). Over the last 5 years the stock of J.M Smucker has declined by -4.5%. Not exactly the returns investors are looking for.