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Smucker’s

Smucker’s. The J.M. Smucker Company: PEST and Industry Analyses By: Kati Wilkerson. Snapshot of Smucker's (I). Incorporated 1912 - Orrville, OH by Jerome M. Smucker 2010 Sales: $4.6 Billion 80% coming from U.S. Markets Industry: Packaged and Processed Goods Sector: Consumer Goods

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Smucker’s

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  1. Smucker’s The J.M. Smucker Company: PEST and Industry Analyses By: Kati Wilkerson

  2. Snapshot of Smucker's (I) • Incorporated 1912 - Orrville, OH by Jerome M. Smucker • 2010 Sales: $4.6 Billion • 80% coming from U.S. Markets • Industry: Packaged and Processed Goods • Sector: Consumer Goods • Products: fruit spreads, retail packaged coffee, peanut butter, shortening and oils, ice cream toppings, sweetened condensed milk, and health and natural foods beverages • Acquired U.S. Brands: Crisco, Dunkin’ Donuts, Eagle Brand, Folgers, Hungry Jack, Jif, Martha White, Millstone, Pillsbury, Kava, Nature’s Peak, Knott’s Berry Farm, Santa Cruz Organic, and many more • Acquired Foreign (Canadian) Brands: Bick’s, Double Fruit, Europe’s Best, Golden Temple, Robin Hood, and Shirriff • Target Market: Working mothers of the middle class

  3. Snapshot of Smucker’s (II) • CEOs: Timothy P. Smucker and Richard K. Smucker • Employs 4,850 full-time employees • Market Share: 17.31%  9/52 • Operates in U.S., Canada, and Australia with consumers in 65 countries • Competes in the U.S. Retail Coffee Market, U.S. Retail Consumer Market, U.S. Retail Oils and Baking Market, and Special Markets • Products sold via direct sales and brokers to food retailers, food wholesalers, drug stores, club stores, mass merchandisers, discount and dollar stores, military commissaries, health and natural food stores, restaurants, schools and universities, and healthcare operators • Key Competitors: ConAgra Foods, Inc.; Kraft Foods, Inc.; Unilever; Nestle; General Mills, Inc.

  4. Smucker’s sales by market:2010 Sales

  5. Pest analysis

  6. Political influences

  7. Economic influences

  8. Social influences

  9. Technological influences

  10. Industry analysis

  11. Intensity of rivalry: High

  12. Buyer power Buyers recognize strong bargaining power, overall, thus causing lower profitability in the industry.

  13. Supplier power Suppliers do not recognize high levels of bargaining power, giving some level of power to industry participants.

  14. Threat of substitute products • With rising costs of raw materials, the prices of products in the industry are likely to increase, causing the consumer to: • Do without; • Buy a different, less expensive product that has the same effect • Buy generic brands; or • Make similar products themselves (this requires time and resources), which could be the less attractive alternative to consumers; • Purchase other grocery items in place of those of industry participants

  15. Threat of new entrants Threat of new entrants is low.

  16. Strongest forces • Buyer Power: • Consumer demand is the driver for sales; without demand, profits will cease • Switching costs are low, having adverse effects on the industry • Threat of Substitute Products: • Because products in the industry aren’t necessities, consumers could easily do without or utilize their resources in other ways • Consumers have the ultimate power in the industry • Intensity of Rivalry: • Industry participants are large and distinguished • Competitors in the industry are fighting for market share and leadership

  17. Industry summary • Overall, the Packaged and Processed Goods Industry is an industry that does relatively well, achieving a semi-attractive rating: • Products within the industry will always be in demand • Buyers have significant power, posing a threat to the industry • Rivalry intensity is contingent on consumer preference for product, price, and availability • While new entrants are unlikely, participant growth and expansion are highly likely, posing an opportunity for industry participants

  18. Suggestions to the industry (I) • Aim to differentiate products to reduce buyer power, and increase power in the industry • Substitutes are difficult to avoid, so participants should attempt to emerge into other markets to increase ability to reduce the threat of substitutes by gaining “substitute market share” • Continue to transition products into healthier options for consumers • In the event of natural disasters, have a fall-back plan • In the event of indirect natural disasters, make products readily available to the affected region • Differentiate products to better suit consumer preferences

  19. Suggestions to the industry (II) • Consider other alternatives to cutting costs to combat increasing commodity prices • Keep in mind the rules and regulations of the FDA when performing R&D of new and existing products • Perform focus groups to determine customer preferences • Determine “what women want” in terms of products for their families • Continue making transitions to “going green”

  20. Smucker’s The J.M. Smucker Company: Competitor and Market Analyses

  21. Key Competitor Evaluation • ConAgra Foods, Inc. • Kraft Foods, Inc. • Unilever • Nestlé • General Mills, Inc.

  22. Competitor Comparison (I)

  23. Competitor Comparison (II) * from 2010 annual reports

  24. Sales By segment Smucker’s experiences most of its sales in the U.S. coffee retail market ConAgra experiences most of its sales in the consumer foods market

  25. Sales by Segment Kraft experiences most of its sales in the U.S. beverages, cheese, convenient meals, grocery & snacks market Unilever experiences most of its sales in the savoury, dressings, & spreads market

  26. Sales by segment Nestlé experiences most of its sales in emerging markets General Mills experiences most of its sales in the U.S. retail market

  27. Overall Competitor Position MarketShare High Low High Smucker’s Market Growth Low Kraft ConAgra Unilever Nestlé General Mills

  28. Competitor Position: U.S. Retail coffee market Market Share Low High High Nestlé Market Growth Low Kraft Smucker’s General Mills ConAgra Unilever

  29. Competitor Position:U.S. Retail consumer market Market Share High Low High Market Growth Smucker’s Unilever Low ConAgra General Mills Kraft Nestlé

  30. Competitor position:U.S. retail oils & baking market Market Share High Low High Market Growth Nestlé Smucker’s Kraft Low General Mills ConAgra Unilever

  31. Competitor position:special markets Market Share Low High High Smucker’s Market Growth Low ConAgra General Mills Nestlé Kraft Unilever

  32. Strategic business groups:Leading competitors of Processed & Packaged Goods Smucker’s enjoys the leading position within the Spreads and Baking Mixes strategic business groups, while they also hold the lead in Coffee and Oils segments.

  33. Core Competences & Strategies

  34. Market segmentation:Consumer Markets

  35. Market Segmentation:Commercial markets

  36. Methods of competition • Brand Loyalty • Coupon Availability • Vendor Relations • Marketing • Television ads, newspaper articles/ads, social media (Facebook, Linked-In) • Acquisitions and Divestitures • Economical / Environmental Advances

  37. Conclusions (I) • Smucker’s Key Competitors: • ConAgra Foods, Inc. • Kraft Foods, Inc. • Unilever • Nestlé • General Mills, Inc. • Consumer goods companies have similar strategies: focusing on innovation and becoming more prevalent in developing markets • Competitive Methods: consumer loyalty, coupon distribution, vendor relations (specials), marketing, acquisitions and divestitures, advances in environmental friendliness

  38. Conclusions (II) • Market Segmentation: working mothers of the middle – upper-middle class; businesses requiring the products within the industry required for business performance • Smucker’s recognizes market leadership in the U.S. Retail Coffee Market, U.S. Retail Oils & Baking Market • Room for growth in Special Markets and overall market share

  39. Smucker’s The J.M. Smucker Company: Internal and SWOT Analyses and Competitive Positioning

  40. Smucker’s Business model • Marketing and Manufacturing Company • Focused in U.S. markets • Sells its products in over 65 countries • Prides itself on acquisition of large brands • Focuses products on bringing families together at mealtime • Driven to make products healthier • Basic Beliefs: • Quality • People • Ethics • Growth • Independence • Hold the belief that building trust and confidence with constituents in the company, brands, & products

  41. Smucker’s past performance:historical sales by market (in Millions) Sales: Growth:

  42. Smucker’s Past performance:Historical Profit

  43. Changes in distribution of sales:By division

  44. Distribution of Sales:By Geography

  45. Smucker’s resources • Agriculture (Raw Materials): • Fruit • Grains • Dairy • Oil: • Transportation of products • Foreign Exchange • Hedge against currency exchange risk • Diversified Portfolio of Brands • Folgers, Dunkin’ Donuts, Crisco, Pillsbury, Eagle Brand, Hungry Jack, Jif, Millstone, Martha White, etc.

  46. Smucker’s key assetsin thousands • Current Assets: • Cash generated from operations ($283,570) • Trade Receivables ($238,867) • Inventories: • Finished Products ($413,269) • Raw Materials ($241,670) • Property, Plant, & Equipment: • Land ($62,982) • Buildings & Fixtures ($308,358) • Machinery & Equipment ($997,374) • Construction in Progress ($31,426) • Noncurrent Assets: • Goodwill ($2,807,730) • Intangible Assets ($3,026,515) • Other ($5,892,910)

  47. Breakdown of Assets

  48. Swot analysis

  49. Smucker’s BCG Matrix: competitive Position Market Share Low High High Market Growth Smucker’s Low

  50. Smucker’s BCG Matrix:competitive brands Market Share Low High High Millstone Eagle Brand Hungry Jack Market Growth Dunkin’ Donuts Crisco Low Martha White Jif Pillsbury Folgers

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