US peanut butter and jelly maker JM Smucker has said that it saw product mix improvements in the third quarter and claimed consumers were returning to more premium brands.
For the third quarter, ended 31 January, the company today (24 February) posted net income of US$135.5m, or $1.14 a share, up from $77.9m, or 68 cents a share, last year.
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Speaking during a conference call with analysts, Smucker’s president of US retail Steve Oakland revealed that the company’s spreads business benefited as consumers who had traded down earlier in the year began to return to better-for-you or premium products.
“Earlier in the year we did see in fruit spread the consumer trade down from more premium items into traditional fruit spreads,” he said. “We were pleased that we saw consumers returning to some of those better-for-you higher cost per unit segments.”
Management also revealed that the company witnessed improved sales at its natural and organic unit, as it was able to recover volumes that had been lost in the first half.
“The whole industry has been down and there was some lag in uptake where we recovered volume lost in the first and second quarters,” Mark Smucker, president of special markets, revealed.
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By GlobalDataHowever, he added: “We do believe that that industry is going to remain challenged so from a strategic perspective we are going to look at building our core but also expanding in some parallel areas.”
While JM Smucker posted a 2% increase in net sales, to US$1.21bn, volume growth outpaced dollar value gains, rising 4%.
Volumes at the group’s consumer food unit were driven by changes in the product mix and increased increased promotional spending, management revealed.
“We had a great Hungry Jack period and that did drive some of our mix change… we did move a lot of tonnage,” Oakland said.
In the consumer business, Oakland said that promotional activity was particularly focused on the peanut butter category.
“A year ago is when peanut butter experienced the tough times. Peanut butter was a very competitive quarter because everyone saw opportunity to lap some of those issues. There was a lot of promotion in the quarter, driven by retailers and manufacturers,” Oakland said.
