NEW YORK — Changes in how consumers search for and acquire consumer packaged goods are forcing companies like the J.M. Smucker Co., Orrville, Ohio, to rethink how they develop and market new products. Smucker, in particular, is investing in its brand building model in an effort to become more granular and agile.

“…We enjoy strong positions in great categories, and we have a scaled supply chain with disciplined processes across the company,” said Geoff E. Tanner, senior vice-president of growth and consumer engagement, Oct. 9 during the company’s annual investor day in New York. “But with that said, relying on these scale advantages is no longer sufficient. To thrive in today’s market and tomorrow’s market, we need to enhance our innovation capabilities, we need brands that consumers love, not just know and trust. We need to ensure we have distribution strength in emerging channels. And we as a company need to embrace agility and a more flexible manufacturing footprint.”

He added that while acquisitions have been a key driver of growth in the past, the new brand building initiative is expected to be “just as strong of a capability.” The brand building model features new consumer insights and data capabilities, an enhanced innovation model, a new marketing model, a more agile operating model and expanded omnichannel distribution capabilities.

New insights and data capabilities include “jobs theory,” which focuses on consumer purchasing decisions, and demand landscapes, which helps managers identify opportunities.

“Another example in this area, a focus has been weaving together a unique set of tools to get a much faster read on how our marketing is performing,” Mr. Tanner said. “Historically, we’ve been too reliant on traditional marketing mix models. And while they’re important, they weren’t providing a fast enough read so we could optimize our marketing in real time.”

Smucker has entered into a multiyear partnership with IDEO, a consultancy, to aid with new product development and employee training. The company also is taking a new approach to partnering with start-up food companies.

“When it comes to innovation, we think about three different types: sustaining innovation largely to maintain the vitality of our core business; scaled platform innovation, where we’re moving into new categories or segments; and emerging innovation, where we’re pushing further into white space. Frankly, this is an area of opportunity for us, which is why we’re deploying a new approach to venturing.”

This past June, Smucker entered into a partnership with Rev1 Ventures, Columbus, Ohio. The partnership is designed to help Smucker identify start-up businesses with potential in such areas as ingredient and process technology, snacking, and commodity and supply chain.

Three years ago Smucker’s marketing budget was $150 million. Today, it’s over $500 million.

“Obviously, that represents recent acquisitions, but it’s inclusive of an $80 million increase this fiscal year,” he said. “The $80 million increase is a major commitment to our brand building efforts. And across media, nearly half of that spend is in digital.

“Our marketing efforts have been too fragmented, both across our internal teams and across our agency network. … we recently reorganized, formally siloed internal marketing teams into centers of excellence, multidisciplinary teams supporting each business. And at this moment, we’re in the process of consolidating all of our agencies with one holding company, and we expect to make that announcement in the coming weeks.”

Smucker management recently made developing a more agile organization a corporate initiative.

“… Across the company, we’re embracing the concept of agile teams, particularly on major initiatives,” Mr. Tanner said. “And we’re embracing design thinking. Think it, make it, and if it fails, fail fast and fail cheap. This is as much a mindset shift as it is new tools and processes.”

Mark R. Belgya, chief financial officer, said management expects to see top-line growth of 2% to 3% and bottom-line growth of around 8%.

“…we’ll achieve this top-line objective by increasing the sales of our growth brands … by a high single-digit rate and keeping the remainder of the portfolio flat to slightly up,” he said. “…we expect gross profit to increase in a moderately faster rate than sales of the same period. This will be accomplished through a favorable margin mix associated with innovation, ongoing budget management programs and capital investments aimed at improving efficiencies and productivity.”

Mark T. Smucker, president and chief executive officer, said the company has made significant changes to its portfolio through acquisitions and divestments.

“… We’ve reshaped our portfolio toward’ growth categories and even within the categories toward the segments that are growing the fastest within each category,” he said. “The size of the categories that we are playing in today is about 25% larger than those we were in five years ago. Pet is our largest at 38% of our portfolio. Coffee is 32%, and food is at 28%. All three of these categories are growing faster than the center store average. So, we do feel like we’re in some of the best categories.”

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