Business model of JM Smucker

Customer Segments

JM Smucker provides a diverse range of products to a spectrum of customers, including various commercial entities. The Company’s customers can be divided broadly as follows:

• General Consumers, comprising the general consumer population who are served through the Company’s own consumer-facing outlets;
• Retail Customers, food retailers, food wholesalers, drug stores, club stores, mass merchandisers, discount and dollar stores, military commissaries, natural foods stores, consumer foods distributors, and pet specialty stores; and
• Foodservice Customers, foodservice distributors, restaurants, hotels and lodging, schools and universities, and healthcare operators.

JM Smucker serves a range of high-profile retail customers, with Walmart its largest customer, accounting for 30% of the Company’s net sales in 2016. During 2016, the Company’s top 10 customers, collectively, accounted for approximately 70% of consolidated net sales.

JM Smucker primarily serves a domestic customer base across the US. The Company does, however, serve international clients, including in Canada, China, and Mexico, with customers in Canada accounting for the majority of international sales.

Value Propositions

JM Smucker provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as a leading supplier of consumer food, coffee, and pet products, with a long history as a reliable and efficient provider of high-quality products;
• The strength of its brands, with the Company owning a number of popular, market leading brands across product categories, including Dunkin’ Donuts, Crisco, Pillsbury, and Meow Mix, which are established household names;
• The diversity of its product offerings, with the Company manufacturing and marketing a wide array of products, including coffee, pet food and treats, cooking oil, peanut butter, and baking products; and
• Its domestic and international reach, with the Company serving a large domestic customer base, having a brand presence across all 50 US states, as well as international penetration across markets such as China, Canada, and Mexico.

Channels

JM Smucker operates a website at www.jmsmucker.com, through which it provides information on its various products, brands, and history. The Company also operates an online store, through which general consumers can purchase a range of JM Smucker products across multiple brands. JM Smucker additionally serves consumers directly through physical retail outlets, notably its chain of Dunkin’ Donuts restaurants and cafes, and its JM Smucker Company Store and Café, which is located in Orville, Ohio.

JM Smucker makes sales to retail and foodservices customers through its in-house direct sales force, which is organised by operating division, as well as geographic region. The Company’s sales force operates out of the Company’s nine sales and administrative offices across the US, and one each in China, Canada, and Mexico. The Company also makes sales to retail and foodservice businesses through a network of brokers and intermediaries.

Customer Relationships

JM Smucker offers a full range of products, across multiple brands and product categories, to consumers on a self-service basis through its online store. This channel enables customers to browse products, make purchase, and schedule deliveries without interacting with members of the Company’s sales teams. The Company also operates largely self-service channels in the form of its Dunkin’ Donuts and JM Smucker retail outlets, where customers can purchase products with limited interaction with sales personnel.

JM Smucker makes retail and foodservice sales through its in-house sales force, the members of which consult directly with customers to establish the details of sales and distribution contracts. Large retail customers, such as Walmart, are afforded their own account management teams to ensure that all their needs are met. JM Smucker seeks to establish long-term relationships with these customers.

JM Smucker offers ongoing support to its customers, providing a range of contact details on its website for its various divisions, offices, and segments. Customers are able to contact support staff online or over the phone in order to receive tailored responses to queries and complaints. Additionally, JM Smucker, and many of its individual brands, operates several social media accounts, including with Facebook and LinkedIn.

Key Activities

JM Smucker is a manufacturer and marketer of branded food and beverage products and pet food and pet snacks.

The Company organises its operations into three reportable business segments: US Retail Coffee, US Retail Consumer Foods, and US Retail Pet Foods. JM Smucker’s US retail market segments produce and sell branded food products to retail outlets across North America, including food wholesalers, drug stores, club stores, mass merchandisers, discount and dollar stores, military commissaries, natural foods stores and distributors, and pet specialty stores.

The Company also operates a non-reportable International and Foodservice segment, which sells products domestically and international to foodservice customers, such as restaurants, hotels, and schools.

Key Partners

JM Smucker operates in collaboration with a range of companies in order to efficiently manufacture, market and distribute its products. These partners include:

• Supplier Partners, comprising suppliers of raw materials and resources, including various commodities and agricultural products that are used in the manufacturing of the Company’s products – including green coffee, grains, peanuts, edible oils, sweeteners, and fruit - as well as materials such as plastic, glass, and cardboard to package the Company’s;
• Service and Vendor Partners, comprising suppliers of various services and tools that are utilised across the Company’s operating segments, as well as companies to which certain functions can be outsourced;
• Channel and Distribution Partners, comprising various sales and distribution intermediaries, including sales agents and brokers, that support the operations of the Company’s sales and marketing teams; and
• Community and Social Partners, comprising a range of non-profits and charitable organisations, with which the Company collaborates on various community and social projects.

JM Smucker has partnered with a range of organisation in recent years, including a partnership with The University of Akron UA Business Solutions on technology training projects, a charitable tie-up with Boys and Girls Clubs of America, and sponsorship partnerships with a number of US athletes at the Rio Olympic Games.

Key Resources

JM Smucker’s key resources are its brands and intellectual properties, its raw materials and supply chain, its IT and communications infrastructure, its manufacturing facilities, its distribution infrastructure, its physical and digital sales channels, its partnerships, and its personnel.

JM Smucker’s products are produced under various patents and marketed under trademarks owned or licensed by the Company or its subsidiaries. The Company owns a number of valuable brands, including Dunkin’ Donuts and Pillsbury. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in the name of JM Smucker, including applications entitled ‘Package with peanut shaped window ‘, ‘Coated food product’ and ‘Bottle’.

JM Smucker own numerous properties that are key to the success of its operations, notably its manufacturing and distribution infrastructure. This includes 23 manufacturing and processing facilities, and 14 distribution centres across North America, as well as 12 sales and administrative offices across the North America and China.

Cost Structure

JM Smucker incurs costs in relation to the procurement of commodities and materials, the operation of its manufacturing and processing facilities, the maintenance of its IT and communications infrastructure, the operation of its sales and distribution infrastructure, the implementation of advertising and marketing campaigns, the management of its partnerships, and the retention of its personnel.

For the year ended 30^th April 2016 JM Smucker recorded cost of products sold in the amount of $4.84 billion, and selling, distribution, and administrative expenses totaling $1.51 billion, including $170.30 million in advertising costs.

Revenue Streams

JM Smucker generates revenue through the production and sale of coffee, consumer food, and pet products. This includes sales made through the Company’s various sales channels, comprising its direct retail and foodservice sales force, its online sales portal, and its physical Dunkin’ Donuts and JM Smucker outlets.

For the year ended 30^th April 2016 JM Smucker generated net sales of $7.81 billion, up on the $5.69 billion recorded by the Company the previous year. The Company’s revenue is generated relatively evenly by its three reportable business segments, all of which recorded net sales between $2.2 billion and $2.3 billion for the year. The Company’s International and Foodservice segment recorded $1.05 billion in net sales.