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CREATING MEMORABLEMEALS & MOMENTS
Caitlin CarrickCaroline Hantman
Chris HarcourtPhu Son Le
Jenny RobertsonHuy Tran
Michelle Toth
November 29, 2011
CREATING MEMORABLEMEALS & MOMENTS
PRESENTATION OVERVIEW
• Company Background• Enterprise Analysis• Industry Analysis• Competitive Analysis• Customer Analysis• Enterprise Growth Strategy Options
CREATING MEMORABLEMEALS & MOMENTS
COMPANY BACKGROUND
• The J. M. Smucker Company was established in 1897 and was incorporated in Ohio in 1921.
• The Company has four reportable segments: U.S. Retail Coffee Market, U.S. Retail Consumer Market, U.S. Retail Oils and Baking Market, and Special Markets.– The Company's three U.S. retail market segments in total comprised over 80 percent
of the Company's net sales in 2011.– The Special Markets segment represents sales outside of the U.S. retail market
• Principal products of the Company are coffee, peanut butter, fruit spreads, shortening and oils, baking mixes and ready-to-spread frostings, canned milk, flour and baking ingredients, juices and beverages, frozen sandwiches, toppings, syrups, and pickles and condiments.
CREATING MEMORABLEMEALS & MOMENTS
ENTERPRISE ANALYSIS
U.S. Retail Coffee
U.S. Retail Consumer Foods/Oils & Baking
Special Markets International
Segment Brands
CREATING MEMORABLEMEALS & MOMENTS
ENTERPRISE ANALYSIS:U.S. Retail Coffee
35% Market Share
Smucker Internal Share Report 52 Weeks Ended 1/23/11
CREATING MEMORABLEMEALS & MOMENTS
ENTERPRISE ANALYSIS:Fruit Spreads
45% Market Share
Smucker Internal Share Report 52 Weeks Ended 1/23/11
CREATING MEMORABLEMEALS & MOMENTS
ENTERPRISE ANALYSIS:Peanut Butter
45% Market Share
Smucker Internal Share Report 52 Weeks Ended 1/23/11
CREATING MEMORABLEMEALS & MOMENTS
ENTERPRISE ANALYSIS: Segment Performance
TTM Ended January 31, 2011
CREATING MEMORABLEMEALS & MOMENTS
ENTERPRISE ANALYSIS:Financial Performance
CREATING MEMORABLEMEALS & MOMENTS
INDUSTRY ANALYSIS
INDUSTRY TRENDS:1. The rising cost of inputs2. Trading down to less expensive
products-generic or store brands
3. Healthy Eating & Environmental Concerns
4. Increasing demand for pre-packaged foods
CREATING MEMORABLEMEALS & MOMENTS
COMPETITOR ANALYSIS
CREATING MEMORABLEMEALS & MOMENTS
COMPETITOR ANALYSIS
Annual Sales ($M)
Total Employees
Renenue/ Employee
($M)
Gross Profit Margin (%)
ROE (%) P/E Ratio12 Month Revenue Growth
12 Month Net Income
Growth
Smucker's $4,826 4,850 $0.995 37.27% 9.03% 17.79 4.79% -2.97%
ConAgra $12,303 24,400 $0.504 22.76% 15.70% 13.48 1.85% 12.57%
Unilever $57,074 -- -- -- -- -- --
Kraft Foods $49,207 127,000 $0.387 35.40% 9.06% 18.98 21.84% 36.18%
Industry Median -- -- 43.93% 16.32% 23.04 8.55% 14.31%
Market Median -- -- 30.57% 5.28% -- 8.06% 44.41%
2010 Key Metrics vs. Competitors
Copyright © 2011 Morningstar, Inc. Financial Data provided by Morningstar.
Copyright © 2011, Hoover's, Inc., ALL RIGHTS RESERVED.
• Smucker’s is better than the competition in terms of R/E, GPM, and P/E ratio.• Smucker’s is behind competition in terms of ROE, and Net Income Growth.• Although Smucker’s 12 month Revenue Growth is positive, 12 month Net
Income Growth is negative suggesting cost management issues when compared to competition.
CREATING MEMORABLEMEALS & MOMENTS
CUSTOMER ANALYSIS
• Largest customer is currently Wal-mart and its subsidiaries– accounted for 27% net sales in 2010
• Major supermarkets within the U.S. and Canada― representing 22% and 2% respectively
• Family oriented/long standing tradition• End user – families and their children
– “Pester power” of children
CREATING MEMORABLEMEALS & MOMENTS
INNOVATION SCREENER
InnovationProduct Service Channel
Business Model
BrandingCustomer
ExperienceProcess Platform Marketing
Idea
Market towards kids; Introduce a fun foody mascot
No Yes Yes Yes Yes Yes No No Yes
Online suite; Ramp up online presence; ecookbooks, online ordering
Yes Yes Yes Yes No Yes No No Yes
Leverage existing brands No No No No Yes/No Yes/No No No Yes
Cut out unpopular products Yes No Yes No Yes No Yes No No
Redesign package to hold less Yes No No No No No Yes Yes No
Reduce the size/number in a package; possibly market as “lower calories”
Yes No No No No No Yes Yes No
CREATING MEMORABLEMEALS & MOMENTS
INNOVATION HEURISTIC
Innovation CompanyCompetitive Advantage
Customer Demand
Mgt SupportDef. of Success
Can Pursue
Idea Fit Execute How*
Market towards kids; Introduce a fun foody mascot Yes Yes Yes Maybe Yes Yes Internal
Online suite; Ramp up online presence; ecookbooks, online ordering
No Yes Yes Maybe Yes Yes Internal
Leverage existing brands Yes Yes Yes Yes Yes Yes Internal
Cut out unpopular products No Maybe Maybe Maybe Maybe Yes Internal
Redesign package to hold less Maybe/No Yes Maybe Maybe Yes Yes Internal
Reduce the size/number in a package; possibly market as “lower calories”
Maybe/No Yes Maybe/No Maybe Yes Yes Internal
CREATING MEMORABLEMEALS & MOMENTS
ENTERPRISE GROWTH STRATEGY
Innovation Portfolio for Smuckers:
1)Mascot Creation & Advertising Campaign
2)Leveraging Existing Brands
3)Expanding Online Presence
CREATING MEMORABLEMEALS & MOMENTS
CREATING MEMORABLEMEALS & MOMENTS
MASCOT ADVERTISING CAMPAIGN
• Pilot campaign will target MA, CT, and NY school buses.
• Advertisement revenue will narrow public school system’s budget deficits and provide Smucker’s access to target audience: Children.
CREATING MEMORABLEMEALS & MOMENTS
MASCOT ADVERTISING CAMPAIGN:Outline of Expenses
CREATING MEMORABLEMEALS & MOMENTS
MASCOT ADVERTISING CAMPAIGN:Financial Analysis
Assumption:Year 1 sales revenue is 10% of FY 2011 Net salesSales Revenue growth rate at 5% YOY
CREATING MEMORABLEMEALS & MOMENTS
LEVERAGING EXISTING BRANDS
• Advertising brands on other brands– New labels that offer:
• Coupons for other brands in the Smucker’s family• Recipes for complementary Smucker’s products
• Bundle as meal solutions in grocery stores– Target Stop & Stop, Market Basket, Shaw’s for
dedicated space
• Online order management system: special occasion gift baskets
CREATING MEMORABLEMEALS & MOMENTS
LEVERAGING EXISTING BRANDS: Outline of Expenses
CREATING MEMORABLEMEALS & MOMENTS
LEVERAGING EXISTING BRANDS:Financial Analysis
Assumption:Year 1 sales revenue is 10% of FY 2011 Net salesSales Revenue growth rate at 5% YOY
CREATING MEMORABLEMEALS & MOMENTS
EXPANDING ONLINE PRESENCE
• Revamp Smucker’s website to make it for fun and interactive for children– Incorporate “fun and foody” mascot– Games containing Smucker’s products/logo
• Online consumer panel – Allow both users and nonusers to give feedback and share
ideas
• Recipes/cookbooks – E-cookbooks, e-recipes– Create “apps” for Smucker’s for use on smartphones and
tablets
CREATING MEMORABLEMEALS & MOMENTS
EXPANDING ONLINE PRESENCE:Outline of Expenses
CREATING MEMORABLEMEALS & MOMENTS
EXPANDING ONLINE PRESENCE:Financial Analysis
Assumption:Year 1 sales revenue is 1% of FY 2011 Net salesSales Revenue growth rate at 1% YOY
CREATING MEMORABLEMEALS & MOMENTS
ENTERRPISE GROWTH STRATEGY:Summary & Conclusion
Innovation Portfolio for Smuckers:1) Mascot Creation and Advertising Campaign
— Cost = $19.75M— NPV = $11.4M
2) Leveraging Existing Brands— Cost = $21.8M— NPV = $8.8M
3) Increasing Online Presence— Cost = $115K— NPV = $2.6M
CREATING MEMORABLEMEALS & MOMENTS
QUESTIONS??
Thank You
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