JM Smucker, the US food group behind brands from Crisco cooking oils to Jif peanut butter, has insisted its products can withstand growing consumer demand for private-label lines.
The company told analysts yesterday (18 February) that it owns a clutch of brands that lead their respective categories in US grocery stores, positions that can help the business see off the threat of private label.
CFO Mark Belgya admitted that private-label products account for around 47% of the cooking oils category but said JM Smucker’s Crisco range was well positioned.
“While private label has grown in the last year, Crisco has been the least impacted of the three major branded competitors,” Belgya said at the Consumer Analyst Group of New York (CAGNY) conference in Florida.
Nevertheless, JM Smucker is keeping a close eye on the difference in price between its branded and private-label competitors. In January, the company cut prices on its oil and baking products by, on average, 13%.
Canned milk is a second category that has seen demand for private-label lines grow. However, Belgya said JM Smucker’s presence as market leader with its Eagle brand and as a private-label supplier itself left the business in a strong position.
“Any consumer shift to private label is to the benefit of Smucker’s,” Belgya said.
Jif peanut butter, a third flagship brand for JM Smucker, has seen its sales slide amid the ongoing peanut salmonella scare in the US – despite having no links to the outbreak.
JM Smucker has advertised the safety of its Jif range on US television and said that, while peanut butter sales had dropped 22%, its brand had not endured such a steep fall in sales.
However, the company predicted the outbreak would continue to affect peanut butter sales in the US for another two months.
In November, JM Smucker snapped up Folgers, the best-selling retail packaged coffee brand in the US, from Procter & Gamble. Coffee is projected to account for 40% of the company’s sales but Belgya said the Folgers buy has given J. M. Smucker greater clout in the eyes of its retail customers.
“It adds to our critical mass and provides the company a much greater relevance to our retailers,” Belgya said.
JM Smucker will issue its fiscal third-quarter results on 25 February.