Sector News

Smucker eyeing M.&A. opportunities

October 27, 2015
Food & Drink

The J.M. Smucker Co.’s $5.8 billion acquisition of Big Heart Pet Brands earlier this year has not reduced the company’s appetite for more.

While Barry Dunaway, chief administrative officer and president of the Smucker’s International business unit, conceded another acquisition the size of Big Heart is not on the horizon, the company is considering several smaller opportunities.

“We categorize acquisitions into three types, all of which play important and distinct roles in achieving our M&A strategy,” Mr. Dunaway said Oct. 20, during the company’s investor day presentation with financial analysts. “Enabling acquisitions, while typically smaller in size, provide Smucker with new capabilities and platforms while capitalizing on our scale and resources. Bolt-on acquisitions relate to targeted brands that expand our presence in an existing category, allowing us to reach new consumers and further leverage our category leadership and infrastructure. And largely lastly, transformational deals like Big Heart bring us into new categories in a big way, with leading brands and strong market presence.”

Mr. Dunaway added that with the current changes taking place in the consumer packaged goods industry, a number of Smucker’s competitors may be assessing their portfolios for divestitures and that trend may create opportunities for the company.

“Closer in, we will continue to look at enabling and bolt-on acquisitions … as we consider current consumer trends and focus on addressing unmet consumer needs,” he said. “Specifically, this may include opportunities to expand in the snacking arena, further building on last year’s acquisition of Sahale Snacks; or in natural and organic foods, as we did with the truRoots brand.”

Two other markets the company is interested in include pet food and coffee.

“ … Within coffee we continue to evaluate the landscape for additional avenues for growth, which may include potential new disruptive opportunities, consistent with our stated objective of participating in all key segments and forms of the coffee category.”

Richard Smucker, chief executive officer of the company, said one of the challenges his management team faces is keeping pace with the changes taking place in the market.

“ … It is critical we keep the changing landscape top-of-mind — and it’s changing faster now than ever before,” he said. “Attitudes toward foods are transforming as consumers increasingly view food as an experience. Smaller, emerging brands continue to gain a foothold. Better-for-you eating is becoming mainstream, with consumers looking for authentic foods with familiar and fewer ingredients. Today’s on-the-go lifestyles of convenient snacking and the ability to purchase through multiple channels are becoming of an increasing importance.”

The company has several initiatives under way to understand and adapt to changing consumer attitudes. At Smucker’s Orrville headquarters, for example, the company has created a “social media command center” where employees listen and engage with consumers through its on-line and social media properties.

“This also serves as another resource to gather consumer insights, supporting our holistic view of consumer activity,” Mr. Smucker said.

In early 2016, Smucker also will open its new innovation center that is located at the company headquarters.

“This center will allow us to show interactive presentations and hands-on brand learning with state-of-the-art technology,” Mr. Smucker said. “This will serve as a key platform to collaborate and expand our relationships with our customers and other constituents while further showcasing our company’s heritage and innovation.”

By Keith Nunes

Source: Food Business News

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