creating memorable meals & moments caitlin carrick caroline hantman chris harcourt phu son le...

CREATING MEMORABLEMEALS & MOMENTS

Caitlin CarrickCaroline Hantman

Chris HarcourtPhu Son Le

Jenny RobertsonHuy Tran

Michelle Toth

November 29, 2011


PRESENTATION OVERVIEW

• Company Background• Enterprise Analysis• Industry Analysis• Competitive Analysis• Customer Analysis• Enterprise Growth Strategy Options


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.


ENTERPRISE ANALYSIS

U.S. Retail Coffee

U.S. Retail Consumer Foods/Oils & Baking

Special Markets International

Segment Brands


ENTERPRISE ANALYSIS:U.S. Retail Coffee

35% Market Share

Smucker Internal Share Report 52 Weeks Ended 1/23/11


ENTERPRISE ANALYSIS:Fruit Spreads

45% Market Share



ENTERPRISE ANALYSIS:Peanut Butter

45% Market Share



ENTERPRISE ANALYSIS: Segment Performance

TTM Ended January 31, 2011


ENTERPRISE ANALYSIS:Financial Performance


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


COMPETITOR ANALYSIS


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.


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


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


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


ENTERPRISE GROWTH STRATEGY

Innovation Portfolio for Smuckers:

1)Mascot Creation & Advertising Campaign

2)Leveraging Existing Brands

3)Expanding Online Presence


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.


MASCOT ADVERTISING CAMPAIGN:Outline of Expenses


MASCOT ADVERTISING CAMPAIGN:Financial Analysis

Assumption:Year 1 sales revenue is 10% of FY 2011 Net salesSales Revenue growth rate at 5% YOY


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


LEVERAGING EXISTING BRANDS: Outline of Expenses


LEVERAGING EXISTING BRANDS:Financial Analysis



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


EXPANDING ONLINE PRESENCE:Outline of Expenses


EXPANDING ONLINE PRESENCE:Financial Analysis



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


QUESTIONS??

Thank You

creating memorable meals & moments caitlin carrick caroline hantman chris harcourt phu son le...

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