JM Smucker Company – Focusing On What Matters Most




Member Todd Wenning (twitter: @ToddWenning) shared this great NYT article with me from 1987, Of Jams And A Family. It tells the story of the J.M. Smucker Company, the jelly and jam market leader. The company was founded by Jerome Monroe Smucker in 1897 who prepared apple butter and sold it from his horse drawn wagon. The J.M. Smucker Company has been around for 120 years, and even today (2017) it is run by a Smucker.

Intelligent Fanatics often times exude what William Thorndike, author The Outsiders, calls Intelligent Iconoclasm. Put simply, they think and do things differently. One of those things is not letting Wall Street get too close.

Here is a snippet from the 1987 article, and I’ve underlined certain sections for emphasis:

By 1959, with the mounting paper value of their holdings, the Smuckers were faced with the need to raise money for taxes. They had two choices: sell out to the highest corporate bidder, or sell enough shares to bring in some cash but not enough to lose control.

They opted for the latter and have been listed on the New York Stock Exchange since 1965; an original $20 share, after numerous stock splits, is now worth $550 -even after ‘‘black Monday.’’ Currently, about one-third of the 7.4 million shares is held by Smuckers or their company executives, another 25 percent by institutions and pension funds and the rest by individual investors.

According to Paul Smucker, going public forced the company to answer questions very different from the ones family members had asked each other. ‘‘That’s when we learned about things like national planning,’’ he says.

Paul ran into another stony silence when he first proposed adding a Smucker’s plant way out in California. He won the board over, however, by finding a small town - Salinas - and by pointing out that Smucker’s could cut costs and boost sales by eliminating two transcontinental shipments, the fruit going eastbound and the jams back westbound. In all, there are now 10 plants in various parts of the country, some unionized, some not.

The Smuckers refuse to travel around and tout their company to stock analysts, but they are happy to personally escort around their factory any who travel out to Orrville.

Every visitor and employee is given a laminated card with a picture of the strawberries trademark and the heading: ‘‘The J. M. Smucker Company Basic Beliefs.’’

‘‘Quality is the key word,’’ says the card, ‘‘and shall apply to our people, our products, our manufacturing methods, and our marketing efforts. . . . Quality comes first; earnings and sales growth will follow.’’

Indeed, such a reputation has enabled retailers to charge more for - and make more profits on - a jar of Smucker’s products. That, in turn, encourages grocers to put Smucker’s on their crowded shelves, which is vital in the battle for display space waged against each year’s 1,600 new food products. Real live Smuckers showing up to shake hands and express thanks, as they regularly do, can also be helpful.

And yet, Paul Smucker notes, shaking his head, whenever stock analysts write about his company they never mention the company’s basic beliefs. They don’t notice how the company refuses to advertise on television shows with violence or sex, or games of chance, or how every person referred to as an employee in a Smucker’s commercial really does work for the company, no matter how odd and made-up their names may seem. One disbelieving Los Angeles radio disk jockey discovered this truth when he telephoned Orrville during his program to ask a Smucker’s operator, Luella Just, if he could speak to Trellis Moore from the Smucker ad. ‘‘He won’t come on until 3:30,’’ replied Luella. But she offered to find Edgar Cutlip.

Paul Smucker adds that in seeking to explain Smucker’s success those stock analysts never mention how every jar is filled a smidgeon more than the label promises. ‘‘That’s better,’’ says Tim Smucker, ‘‘than one person opening a jar of jelly and finding a half-ounce less than they paid for.’’

The analysts do, however, note the company’s concentrated focus on food products, its employee teamwork and its sales success - earnings this year are expected to be more than $18 million on sales of over $300 million, up from $10.7 million on sales of $190.7 million five years ago.

‘‘The food business today is not a growth market,’’ says stock analyst McDevitt, ‘‘yet Smucker’s increases its market share about 1 percent per year. And the executives disprove the old theory of family companies - rags to riches, and back again, in three generations.’’

Smucker boys absorb the jam business from childhood. And family executives make it a policy to meet every one of their 1,500 employees, which has helped minimize any labor strife. Paul, who started in the business as an assistant cook, writes all new shareholders, thanking them for their confidence and suggesting they tell a friend to try Smucker’s products.

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