uploads///JM Smucker Sales by Segment

J.M. Smucker’s Coffee, Pet Foods Segments Drove Its Fiscal 4Q16

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Revenue contributors

As discussed earlier, the J.M. Smucker Company’s (SJM) revenue for fiscal 4Q16 rose by 25% compared to the same quarter a year ago.

The company derives its revenue from its four segments: U.S. Retail Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and the International and Foodservice segment. The U.S. Retail Coffee and U.S. Retail Pet Foods segments contributed a combined 59% to SJM’s total revenue.

Various factors contributed to this performance. Among these were the implementation of the planned Folgers canister downsize, a net benefit of lower commodity costs and pricing, the successful launch of a Dunkin’ Donuts K-Cup, and moderation in competitive activities.

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Coffee segment exceeded expectations

Management mentioned during the company’s earnings call that SJM’s coffee business exceeded expectations for the year. Lower pricing on Folgers roast and ground coffee drove the performance of the coffee segment.

The Dunkin’ Donuts brand generated $220 million in retail sales, gaining SJM a market share of 15% in the K-Cup segment. The Cafe Bustelo brand recorded double-digit sales growth of 28%, benefiting from strong performance in both its roast and ground and K-Cup offerings.

The coffee business is expected to continue its momentum into 2017, with the Cafe Bustelo brand’s growth trend expected to improve.

Pet Foods segment’s contributions

The Pet Foods segment saw its sales rise by 3% to $563 million in fiscal 4Q16. There was low double-digit growth in premium pet food brands, aided by the Natural Balance brand. However, pet snack sales were moderate.

Smucker’s peer ConAgra Foods (CAG) and Campbell Soup (CPB) generated revenue of $2.9 billion and $1.9 billion, respectively, for their last-reported quarters. The iShares Morningstar Mid-Cap Value ETF (JKI) invests 1.3% of its portfolio in CAG. The PowerShares S&P 500 Low Volatility ETF (SPLV) invests 1.1% of its holdings in CPB.

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