Smuckers Case

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Smuckers Overview For 117 years the J.M. Smuckers Company has been committed to bringing the highest quality of staple products to households, with the intention of bring families closer and to provide delicious meals. This well established company has been led by four generations of Smuckers. Over the tenure of its existence there has only been 5 CEO’s. They all shared a common goal, to bring the finest quality food to households and to hold the number one market position in their category. With five of their top executive managers owning a fair amount of shares shows that they are going to act in the best intentions towards the shareholders. (Appendix 1). Right now Smuckers is sitting at a P/E ratio of about 18.43, which is about…show more content…
Hormel is currently trying to expand into China by attempting to introduce an unfamiliar product to numerous of the Chinese households. In response to Hormel’s mass marketing and effort to take over Jif’s number one market share, Smuckers spent ~$55 million on a capital investment in their Ohio factory to improve the efficiency and increase productivity within the facility. Furthermore, they are converting their facility in Memphis to support the growing peanut butter production to hold onto that number one market share in the United States. Kraft Foods is also trying to acquire the control in both the peanut butter market and the U.S. coffee segment. Kraft peanut butter currently has a ~95% awareness in Canada to go along with their ~70% market share, leaving them to be one of Smuckers biggest competition up north. What has Smuckers done to improve their market share in Canada? Just like with their competition with Skippy, Smuckers is expanding many of their factories to increase the amount of peanut butter being produced. Kraft has also teamed up with Keurig to go after a bigger share of the U.S. coffee market.…show more content…
(Appendix 9) An additional risk that Smuckers has to deal with is with enormous amount of peanut allergies. With nearly 100% of schools banning any type of food that may contain or may have come in contact with peanuts, Smuckers will have a tough time targeting this demographic. Volatility of the futures market for commodities and interest rates, Smuckers has done their due diligence by hedging and purchasing derivatives to protect themselves of any catastrophic events like the ones occurring in 2008. Be in tuned of the risk of the price of oil to increase. If oil price increases then their costs of transporting raw materials, finished goods, powering their facilities may all increase as well. Risks around the marketing of their products costs of marketing and risks people are not getting the correct image. Smuckers has done a great job of marketing in Canada and in the US, along with getting worldwide exposure by sponsoring the U.S Olympic team for not only Sochi Olympics but also the 2016 Summer Olympics in Brazil. It will be a great payoff to reach out to existing customers and create new ones along the way. 4 | Page Candidate #6 Valuation and Assumptions (DCF Appendix

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