J.M. Smucker Company

J.M. Smucker company

Excutive Summary

This report provides an analysis and evaluation of profitability, liquidity and leverage of J.M. Smucker company. They were falling behind big companies in the processed food industry and knew changes had to be done to survive in the industry.

Financial ratios in terms of profitability, liquidity were used to determine their financial position. The results show Smucker’s company financial position has been outstanding from 2006-2010. They have accumulated cash flow for the next few years to accomplish their intended objectives. The major areas of success were from their strategic acquisitions and the sales of their two coffee lines, Folgers and Millstone.

Current economic conditions and social trends were considered in analysis of the Smucker’s Company.

Recommendations discussed in the report includes maintaining customer trust, new product introduction, advertising and international expansion.

INTRODUCTION

Company Background

In the beginning of the 21st century, the J.M. Smucker Company was one of the leading producers of jams, jellies and preserves in North America and Australia. However their annual sales of hundreds of millions couldn’t be compared to food industry giants like Nestlé, Unilever, and Kraft Foods whom made twenty plus billions in revenue annually. With Smucker’s small revenues and limited product line, they were losing bargaining power for price increases or better product placement with grocery retailers who were rapidly consolidating. The large food producers were also merging and acquiring other food companies to maintain their bargaining power with supermarkets. Smucker’s knew they had to conduct their own acquisitions in order for survival in the processed food industry.

Smucker’s basic strategy is to own and market Number 1 center-of-the-store brands in North America. Their ultimate goal was to achieve sales growth on existing brands, improve profit margins and product-line growth...