It’s been a good week for JM Smucker: The company just announced the ‘small but important’ acquisition of Enray Inc., reported its ‘strongest first quarter earnings ever’, and continued to see stellar growth for the Uncrustables brand.
Speaking with analysts during an investor call, Richard Smucker, CEO & Director said the acquisition of Enray would provide added scale for the company’s existing natural foods business by adding an on-trend line of organic, gluten-free, ancient grain products to its portfolio.
Enray is a manufacturer and marketer of premium organic, gluten-free ancient grain products, including sprouted and non-sprouted grains, pasta, and cookies, primarily sold under its flagship brand, truRoots. The company generated net sales of more than $45m over its latest 12-month period.
Steven Oakland, President Of International, Foodservice and Natural Foods for the company, added: “[Enray is] a wonderful business and we think it's got great growth potential […] we think there's opportunities for distribution. They've done a great job on supply chain and innovation and we've got a much larger go-to-market organization in the natural channel.
“We did want to send a message though that it is a profitable business. It's just small at the current time.”
For its Q1 results, the company reported an overall increase in volume of 1%, which was driven by increases of 4% in both the U.S. Retail Coffee (behind solid gains for the Folgers, Dunkin' Donuts and Cafe Pilon brands) and U.S. Retail Consumer Foods segments.
Growth in excess of 20% has continued for the company’s Uncrustables brand, said Vincent Byrd, President, COO and Director, with sales of the brand in U.S. retail channel up 22%.
“This marks the third quarter in a row where Uncrustables has grown in excess of 20% in this channel. We are currently in the midst of our key back-to-school promotional period and are encouraged by the programs we have in place and look forward to a successful conclusion to our overall spreads and uncrustable businesses.
“Turning to the bake aisle. Pillsbury volume was up 2%, driven by flour and frosting, including contributions from the successful launch of our new seasonal varieties,” added Byrd.
“Profitability for baking mixes continued to improve due to the previously discussed change in our promotional strategy on cake.”
Byrd added that consumers have responded very well to the company’s new product innovation, marketing, and merchandising activities.
“As commodity costs have moderated, we have been able to give consumers even greater value and the response has been favorable. We look forward to carrying this momentum into the back-to-school and holiday merchandising seasons."
Despite the increase in volumes, Q1 FY14 net sales decreased 1%, compared to 2013, which reflected price declines taken over the past 12 months, said the company.
"There is clearly momentum across our business as we experienced our strongest first quarter earnings ever," said Richard Smucker.