Wednesday, March 10, 2004

In self-defense, the small get bigger In an attempt to get bigger to combat bigger rivals, US food company JM Smucker bought another American food company, International Multifoods, Inc. The combination, it is hoped, with allow the company to stand up better in the competition for supermarket shelf space with food giants Altria (Kraft/Nabisco), General Mills, Nestle, and others. The purchase is an $840 million deal. JM Smucker is the #1 seller of jams, jellies, and preserves in the US. The company also sells Jif, Adams, and Laura Scudder peanut butter; Dickinson's (fruit spreads), Shirriff (Canada) dessert toppings; Mary Ellen, HenryJames (Australia) and Good Morning (Canada) jams and jellies; R. W. Knudsen, Santa Cruz Organic, After the Fall, Jeva, Heinke, Rocket Juice juice; Natural Brew soft drinks; and Crisco cooking oil and shortening. Jif and Crisco were purchased from Procter & Gamble in 2002. It has $1.3 billion in sales in 2003. International Multifoods's most famous brand Pillsbury, but only in part. General Mills, which bought the Pillsbury brands from Diageo, retains the use of that brand for frozen and refrigerated brands. International Multifoods owns the brand for flour, baking mixes and desserts. (The company got rights to the Pillsbury doughboy mascot, as well.) The company also sells the brands Robin Hood (flour, mostly Canada), Pet (condensed milk), Hungry Jack (pancake mix), Bick's (pickles), Old Mill, Purity, Red River (hot cereals, Canada), and Martha White (bake mixes). The company had over $900 million in sales in 2003. Multifoods has lost traction in the merciless food industry, especially to General Mills. It's another indication that the small get crushed, and that a certain heft in the market is the only defense. Like small banks that must combine to avoid being crushed, small food companies need to do the same. The Minneapolis Star-Tribune (5/11/2004) quotes Multifoods CEO Gary Costley about the reasons for the deal: I call it the Wal-Mart effect … Size and scale are very important. We have great brands and people but that doesn't necessarily solve the size and scale issue. ... When you compete with a company with the size of General Mills, what they do in the short term really matters. 6:15:10 PM

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