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Cereal Packaging Report 2017

Stand Up Pouches - Product Packaging Done Right

Lessons from Smucker's: Why Food Brands Need a Packaging PARTNER

Posted by Brittany Nader

Smucker's Jam

The J.M. Smucker Company, colloquially referred to by its Smucker’s brand name, is arguably one of the largest and most recognizable food manufacturers in the world.

If you’re buying jelly, jam, or ice cream toppings, there’s a very likely chance you’re going to reach for a Smucker’s product on store shelves.

With recognizable slogans like “With a name like Smucker’s, it has to be good!” the company has successfully built brand recognition and established a presence well beyond its Orville, Ohio home base. One of Smucker’s subsidiaries is Big Heart Pet Brands, a top producer, distributor and marketer of branded pet products like Meow Mix, 9Lives, Natural Balance, Milk-Bone, and Kibbles ‘n Bits.

Smucker’s also purchased Folgers from Procter & Gamble and owns and/or manufactures Jif peanut butter, Crisco, Dunkin’ Donuts packaged coffee, Hungry Jack, and Pilsbury flour and baking mixes.

With a widespread presence and hand in so many facets of the food industry (and consumers’ day-to-day lives),  how can Smucker’s be struggling?

According to CNBC, the food manufacturer’s shares dropped to around $115 at the beginning of the month — a low the company hadn’t seen since early 2016 when it was trading around $117. The drop is reflective of larger, broader struggles CPG brands are currently facing. Smucker’s is dealing with pricing pressure at the supermarket level as consumers increasingly seek out lower-priced and natural products they would find at private-label stores like Aldi and Trader Joe’s.

Smucker’s, while a household name, is caught in the middle of today’s shopper’s preference for discount food items or organic, specialty products they’re willing to pay a little extra for. One way mega-brands like Kellogg’s, Campbell Soup Co., and Hershey’s have remained competitive with these smaller, specialty brands and grocers is through product innovation and a focus on how their packaged products are being marketed.

Smucker's appointed Clorox’s Chief Operating Officer and Google’s president of brand solution to its board of directors as a means to improve business, but what the food giant needs to focus on at this point is the tremendous cost savings and resources to innovate that supply chain solutions could bring the company.

Supply chain is a partnership — not a one-way street. Packaged food brands need to view the suppliers they work with as true members of the team, not just another vendor. A close, working relationship will help them innovate their product and packaging and stay ahead of the game — not to mention, avoid getting squeezed by major retailers.

You could have the greatest, most recognizable and high-quality product on the market, but if retailers are demanding cost reductions, you’re at a crossroads. Your company can give in and watch its margins disappear and hope you can make them up with other products, or you can say “no” to demanding retailers and watch major grocery chains make deals with your competitors.

The easiest solution to this quandary is saying “yes,” because you found the most effective way to increase your margins and get your margins back. This is through working with a company willing to partner with you to alleviate your pain (or perceived pain). It’s not about having a packaging supplier send you quote after quote. It’s a focused look that is successful through your willingness to work together to determine where cost savings are hiding.

This could be per-piece price, cost of carrying inventory, cost of carrying money (e.g. deposits, payment for material in the warehouse you aren’t using), freight, having stock set aside for immediate use, or having emergency stock readily available in case you have an unexpected spike or order.

Viewing packaging as an afterthought is where many CPG companies — no matter how big or small — are making grave mistakes. Not only does product packaging serve as the voice of your brand and has the power to distinguish your product from the competition, it’s also where you can save money, improve the quality and freshness of your product, and — with the right packaging partner — ensure your goods are packaged and ready to be shipped to retailers and customers exactly when they need it.

Working with big, faceless suppliers is where larger brands like Smucker's run into many hang-ups that diminish their reputation and relationships with retailers and clients. Unexpected orders, missed delivery dates, fines, and misprints or incorrect labeling are major issues that could be avoided by finding a packaging partner who has proven, effective supply chain solutions and the ability to turn on a dime and help you refresh your product and brand image right when you need to.

Remember: Your company is the one that will save 10% or more on packaging through a close partnership. Your partner gets table scraps. If you’re trying to save money with an anonymous supplier based out of some mysterious location, the one percent you’re trying to squeeze out of them will just be tacked on somewhere else. Large suppliers will always find a way to add that money back. A trusted partner, on the other hand, will always work with you to find new cost savings and innovative ways to update your products — and packaging — to appeal to today’s savvy shopper.

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(Image Source: Nerdy Foodie Mom)

Topics: Supply Chain Management

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