In 1752, Amish/Mennonite farmer Christian Schmucker migrated from Switzerland to Pennsylvania. In 2016, his son’s son’s son’s son’s son’s son’s son’s son’s son, forty-six-year-old Mark Smucker, became Chief Executive of the J. M. Smucker Company of Orrville, Ohio. That makes him a ninth-generation American. This is the story of this great family and its iconic company.
By 1817, the Schmuckers had changed their name to Smoker, which did not last because these Pennsylvania Dutch people opposed the use of tobacco, changed it again to Smucker, and settled in Ohio. The area around their town of Orrville had plenty of apple trees, some reportedly planted by Johnny Appleseed. Christian’s grandson’s grandson, Jerome Monroe (“JM”) Smucker, operated a cider mill in 1897. He charged one cent a gallon to press apples into cider for the local farmers. Out of this operation, JM developed a method for making better-tasting apple butter, which the family began to sell in neighboring counties. JM’s sons Willard and Welker went to work in the family business by the time they were fifteen.
In 1921, JM incorporated the private company, wholly-owned by him and his children. Annual sales were $147,000. Soon after, they began making jams and jellies, added a siding of the Pennsylvania Railroad for more efficient shipping, and started selling their products in surrounding states.
The company was tiny compared to the big canning companies or the jelly-making Welch’s company. But they kept plugging away, and under Willard Smucker’s leadership, improved their products, created a custom-shaped glass jar, and opened a plant in Washington state to be near the best and least expensive apples. By 1939, sales reached $1,000,000 per year.
By the early 1960s, the J. M. Smucker Company under Willard’s son Paul had gone public, broken the $10 million sales barrier, and made a few acquisitions. It took until the 1970s to become number two in jams and jellies, behind Welch’s. By 1980, Smucker’s was number one, and Paul’s son Tim was climbing into the driver’s seat. Tim represented the 8th generation American Smucker, and the 4th generation to run the company.
Under Tim, the company saw dramatic change. In 1989, sales reached $367 million. Several smaller acquisitions added to the continuing natural growth of the company. The big shift in the company’s product mix began with the 2002 acquisition of Jif Peanut Butter from fellow Ohio company Procter and Gamble. The Cincinnati-based giant had started to re-evaluate its product “portfolio,” entering fast-growing fields and leaving others where it felt the future was less promising. Smucker’s also bought Crisco from P&G. Though P&G might not have been excited by the future of these brands, they were natural additions to the Smucker line and the Smucker grocery store distribution system.
The next year, Smucker’s bought Pillsbury flour, though they later sold off that business. While these acquisitions propelled Smucker’s into a larger company, they were small potatoes (or apples?) compared to the acquisition, announced in late 2008, of Folgers Coffee, another Procter & Gamble castoff. The $2 billion purchase doubled Smucker’s size and resulted in P&G’s shareholders owning over half of the Smucker company’s stock, through an unusual, tax-saving transaction called a “Reverse Morris Trust.”
Folgers had begun as a San Francisco coffee roaster in 1850. By the time Procter and Gamble bought the company in 1963, it had passed up California rival Hills Bros. Coffee in the west and Midwest but was not strong in the big east coast market. The national market was dominated by General Foods’ Maxwell House coffee for at least the previous fifty years. With P&G’s marketing, sales, and distribution brilliance, Folger’s entered new markets and passed up Maxwell House by 1980. (These things don’t happen overnight!).
Yet almost thirty years after winning the grocery store ground coffee crown, P&G was less excited about Folgers’ future and their friends in Orrville decided to give it a try.
The coffee industry has always been extremely competitive. Maxwell House, named after a Nashville hotel, had been purchased in the late 1920s by the emerging General Foods Company, under the leadership of Marjorie Merriweather Post and her husband E.F. Hutton. Ms. Post had inherited the old Postum Company when her father committed suicide. She became famous for her interior designs and her homes, including Mar-A-Lago in Florida.
The Folger family had an even more tragic fame: young heiress Abigail Folger was killed with Sharon Tate and others by Charles Manson’s evil crew.
From the 1960s onward, the leading coffee brands raged an intense war, producing many memorable television commercials. By the time of Smucker’s 2008 acquisition of Folgers, Starbucks and craft coffees had come along, and old-fashioned canned ground coffee on supermarket shelves had lost its momentum.
Smucker’s entered another new field, this one booming, when the company bought Big Heart Pet Brands in 2015. This acquisition added Meow Mix, Milk Bone, 9Lives, Kibbles ‘n Bits, and Gravy Train to the company’s list of products. Three years later, they bought the Nutrish line of pet foods.
All this history brings us to today. In the fiscal year ending April 30, 2019, the last year for which full results have been reported, the J. M. Smucker Company racked up sales of almost $8 billion. $2.9 billion of the total was generated by pet foods, followed by $2.1 billion worth of coffee, where Folgers has more than double the U.S. market share of Maxwell House (now owned by Kraft Heinz). The famous jams and jellies are almost insignificant, except to the heart, soul, and reputation of the Smucker company.
In Fortune magazine’s most recent list of the 500 largest American companies, based on 2018 results, Smucker’s was the 12th largest of 14 food makers listed, but 4th in profits and highest in profit as a percent of sales. Bigger companies Hershey, Conagra, and Campbell Soup made less money. The company – and the family – have come a long way from apple butter!
As students of the global corporate scene for the last fifty years, we cannot help but look at how the stockholders have fared. With the 2008 acquisition of Folger’s, P&G’s stockholders received over half the stock in Smucker’s, though the Smucker family retained hundreds of million dollars’ worth of company stock and remained in the management driver’s seat. Over the next several years, P&G hit a rougher spot and their stock under-performed the market, while Smucker stock did well and beat the market. But over the last few years, Smucker’s sales and profits have not grown significantly, while P&G has gotten back on track. Smucker stock has dropped in price while P&G stock has done well. Taking both periods of time together, since January of 2009 when the Folger’s acquisition closed, stocks in the two companies have performed almost exactly the same, rising about 132%. (The S&P 500 index of stocks, reflecting the overall stock market, has tripled in the same period.)
As we look back at this illustrious history of two great American companies – Procter & Gamble this year celebrating 183 years in business and Smucker’s reaching 123 – we can only conclude that both companies have seen many storms before, have stayed true to their roots and “core values,” and are likely to persist for many decades to come.
Mark Smucker, who turns fifty this year and the fifth generation to head the “family business,” still based in Orrville, now faces competitive challenges, just like his predecessors. In the key pet food category, the two giants are the Swiss company Nestle, the world’s largest food and beverage company, and the extremely private pet food and candy empire of the Mars family. In coffee, Maxwell House battles on and upstarts like Starbucks grow stronger. But with a name like Smucker’s, “it has to be good.” Those of us at the American Business History Center are rooting for another hundred years of Smucker success.
American Business History Center
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