Prices are falling for some of Smucker’s top brands, including Jif peanut butter and Folgers coffee. That may be great news for shoppers, but it’s not what Smucker’s investors wanted to hear.
The company reported earnings Tuesday that missed forecasts, and a bigger drop in sales than expected. It also lowered its outlook for 2020. JM Smucker (SJM)’s stock plunged more than 8% Tuesday. It was the worst performer in the S&P 500.
Smucker’s said lower prices at supermarkets for peanut butter and coffee are hurting its bottom line. Many big, brand name food companies are struggling because of pressure from big grocery retailers such as Amazon (AMZN), Walmart (WMT), Target (TGT) and Kroger (KR), to keep prices low.
Competition from innovative upstarts that are selling organic and natural products is a problem for many large traditional food companies, too. Kraft Heinz (KHC) in particular has been hit hard but other large companies like General Mills (GIS), Campbell Soup (CPB) and ConAgra (CAG) are all trying to adapt to changing consumer tastes.
Even as prices for well-known staples continue to fall, many consumers are also trading up to pricier, premium products, CEO Mark Smucker said on a conference call with analysts Tuesday.
“We are taking aggressive steps to ensure we’re positioned properly in the marketplace,” Smucker said.
But Smucker’s isn’t just struggling to sell food for people. The company’s bet on pet food isn’t paying off, either. Smucker said Tuesday that Nutrish, the brand of dog and cat food endorsed by celebrity chef Rachael Ray, has been struggling.
Nutrish was hurt by a “greater than anticipated impact from premium competitors’ aggressive pricing actions” and that the company expects “continued softness for the Nutrish brand” in the current quarter, the CEO said.
Smucker’s bought Nutrish parent company Ainsworth in 2018 for nearly $2 billion. It also owns Milk-Bone and Meow Mix following the 2015 acquisition of Big Heart Pet Brands.