The food industry has been undergoing a lot of changes in recent times. Though it’ll never go out of vogue, since people keep eating as long as they live, it has its own set of problems. Increasing costs and budget-conscious consumers have made life difficult for food retailers; thanks to penny-pinching shoppers, even a small increase in product prices can lead to lower volumes.
However, some great food companies have managed the situation well, and are now witnessing better days. The J.M. Smucker Company (NYSE:SJM) posted particulaly remarkable third-quarter results. Let’s see what it did.
An all-around performance…
Great demand for The J.M. Smucker Company’s (NYSE:SJM) products, as well as a shrewd acquisition strategy, drove revenue north by 6% from last year, clocking in at $1.56 billion. The success of K-Cups has been a cushion for a number of companies, especially Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), and Smucker was no exception.
The J.M. Smucker Company (NYSE:SJM) K-cups sales surged 50% as consumers continued to drink more and more coffee. However, another key reason of the top line growth was Smuckers’ buyout of Sara Lee‘s food and beverage business, which contributed one-third to the increase.
Smucker gets even more interesting when we get to the bottom line. Due to higher sales and decreasing coffee costs, the company witnessed increasing margins as well as higher earnings.
The well deserved segment
The J.M. Smucker Company’s (NYSE:SJM) International, Foodservice, and Natural Foods segment was a remarkable performer during the quarter. Along with the benefits of Sara Lee’s acquisition, huge demand for natural foods led to revenue growth of 28%. The increasing popularity of natural and organic foods, driven by health-conscious consumers, has contributed largely to the industry players, including J.M. Smucker.