JM Smucker sells juice and grains businesses, and will shut down plant

Dive Brief:

• The J.M. Smucker Company is selling its natural and organic beverage and grains businesses to Nexus Capital Management LP in a cash transaction worth $110 million. The sale includes the R.W. Knudsen and TruRoots brands and a licensing agreement for Santa Cruz Organic beverages, as well as manufacturing and distribution facilities associated with those brands in Chico, California, and Havre de Grace, Maryland. 
• The company also announced it was closing and selling its manufacturing facility in Ripon, Wisconsin, and transferring that work to its Orville, Ohio, main facility. According to Wisconsin media reports, the plant makes jams, jellies and ice cream toppings. It has more than 90 employees, who will be able to apply for other roles within the company, a Smucker spokesman said.
• Smucker has been working to focus its portfolio on areas with the most growth potential in recent years. Earlier this month, the company announced the sale of its private label pet food business. It also sold the Crisco oils and shortening brand in 2020.

Dive Insight:

As inflation, supply chain issues and consumer volatility shake the industry, Smucker is focusing on what can help it grow. Juices from R.W. Knudsen and easy-to-prepare ancient grains from TruRoots are both in areas far from the company’s current growth core — if not losing sales. In Smucker’s last fiscal year, the businesses it is selling made about $140 million in revenue, the company said.

“This transaction supports our strategy to direct investments and resources toward core brands positioned for growth,” Tina Floyd, Smucker’s senior vice president and general manager for Consumer Foods, said in a written statement. “By focusing resources on our core brands, including Uncrustables sandwiches, Jif and Smuckers, we are positioning ourselves to build on our market leadership while continuing to support the growth of the overall category.”

Smucker has been talking about optimizing its portfolio for years. In February, President and CEO Mark Smucker told analysts at the Consumer Analyst Group of New York conference that the company would be continuing to evaluate opportunities to align its platform with key growth opportunities. 

Smucker has been in the juice business since it acquired Knudsen & Sons in 1985. But consumer tastes have changed over the past 36 years. The drinks, once seen as a healthy way to get nutrients, have seen their popularity fall as the high natural sugar content of juice drives consumers away from the segment. Smucker is not the only major food company exiting the juice segment. In August, PepsiCo announced it was selling its juice business, headlined by the Tropicana brand, to private equity firm PAI Partners for $3.3 billion.

While there may be more ability for growth in easy-to-cook natural grains, it’s a niche area where Smucker has no other products. Smucker bought TruRoots parent company Enray in 2013 with the intention of using the brand to expand its leadership in natural foods and get into the gluten-free foods area, according to a release about the purchase.

In 2021, Smucker’s key interest is improving its position where it’s already a leader. Last month, the company announced it was building a new $1.1 billion Uncrustables plant and distribution center in Alabama, creating about 750 jobs. This will be the third plant dedicated to the frozen sandwich brand, which the company says has grown to about $500 million in annual net sales, posting double-digit growth annually during the past decade. In the next five years, Smucker expects Uncrustables to reach approximately $1 billion in annual net sales.

The Wisconsin plant closure doesn’t appear to be linked to this sale, since workers there make Smuckers’ flagship products. The release from the company said it was to “further optimize operations.”

It is the second facility Smucker plans to close next year. In March, the company announced it was laying off an undisclosed number of employees as it is “evolving our corporate organizational structure” in an emailed statement. Later that month, the company said a liquid coffee plant in Virginia would be shut down in 2022.

The Wisconsin plant was in the local news in October as about 20 people in the community protested Smucker’s company-wide COVID-19 vaccine mandate for employees. According to The Ripon Commonwealth Press, protesters identified themselves as current and former Smucker employees, as well as concerned community members. Thursday’s closure announcement is unrelated to the Dec. 15 deadline for salaried employees to be vaccinated against COVID-19, spokesman Frank Cirillo told Food Dive in an email. Hourly employees are required to be vaccinated by March 18.