Relative to the days when it was one man in Orville, Ohio, selling apple butter from a horse-drawn cart, Smucker Co.’s growth has been ludicrous. By 2000, the company, which was basically built on fruit — jams, jelly, juices, etc. — had reached some $600 million in business. Mark, the fifth-generation Smucker to head the company, speaking at Walsh, said that it was then that the company had reached an inflection point.
“We recognized that in order to survive for the next generation of employees, the Smucker family made a decision to take on some very large acquisitions. We recognized that we were good at marketing brands,” he said. “And we could market brands in other categories and build emotional bonds between our brands and consumers, and that is what we were good at.”
And the company has made some incredibly large acquisitions. It acquired Jif and Crisco for $813 million in 2001, which doubled its size. Four years later, it acquired International Multifoods in an $840 million deal that brought Pillsbury, Hungry Jack and Martha White brands under its umbrella. (In July, the company announced it was selling its U.S. baking business, which would divest it from the Pillsbury, Hungry Jack and Martha White brands.) Its $3 billion acquisition of Folgers in 2009 made Smucker Co. a $4 billion company, and that’s before it added Big Heart Pet Brands in a $6 billion transaction in 2015, which gave it Milk-Bone, among others.
“We are a house of brands. We’re not a branded house,” he said.
Pressure
Though Mark has only been leading the company for about two years, he said he took the position as about two thirds of the CEOs in the food industry turned over. Some of that he said was a coincidence, with some exits planned and some not, but the moves coincide with what he called some very intense pressures that the industry faced and continues to face.
Part of that pressure comes just from being a public company.
“We have a lot of responsibility to Wall Street,” Mark said. “The shareholder activism, the zero-base, the cost-cutting initiatives that are going on in our industry is intense. And then, overall, just the general short-term-ism makes it hard to make the right strategic decisions for businesses, for our businesses over a two- to three-year period, because we’re trying to hit a number. So that tension between short- and long-term is another pressure that we are all experiencing.”
Additionally, he said the traditional grocery channel, a home for most, if not all of Smucker Co.’s products, is under significant pressure as consumers have more places to buy goods, which has made it easier for consumers to find emerging craft brands they can identify with. And that leads to its other challenge: connecting with consumers.
“Big brands are not as relevant as they used to be,” he said. “They’re not going away, but they’re not as relevant.”
He referred to the generation currently around college age as “cellennials,” largely because of their relationship with their phones and technology — a generation that has only known life with smartphones.
“As consumers are changing, both millennials and the generation that follows, the expectations that a consumer has toward brands is very different,” Mark said. “It drives a lot of things.”
