The story, as Paul Smucker tells it, doesn’t sound like boasting: ”I was taking a cab from LaGuardia into Manhattan, and the cabbie was a garrulous type, as so many of them are. He asked me what I did, and I told him I was in the food business, and so he asked, what kind of food? And I said I make jams, and then he wanted to know my name, and so I told him.”

The driver turned out, not surprisingly, to be a fan of Smucker’s jams – particularly red raspberry. He told his passenger why he liked Smucker’s: ”I can afford to eat your jam and have as good a product for my breakfast as any of the guys on Wall Street.’ ”

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And thus has the J. M. Smucker Company become the market leader in preserves, jams, and jellies: by making quality products – a bit of a luxury, but a luxury that (just about) everyone can afford.

”We’ve got loyal consumers, and that loyalty goes right through the ups and downs of the economy,” notes Paul Smucker, grandson of the eponymous founder, Jerome, and now chairman of the company, in an interview in his offices on Strawberry Lane – a modern brick building, but graced with an old-fashioned black cast-iron stove.

”We’re grateful – it’s almost unbelievable,” he adds.

When the industrial giants of the Midwest were reeling under the pressures of recession, the big kettles in Orrville kept steaming along nicely.

And like the strong man at the county fair squeezing extra drops of juice from the lemon everyone else thought was squeezed dry, Smucker’s has generated profits that are growing faster than sales.

For the year ending April 30, sales were $214.9 million, up 7 percent over the year before. Profits were up 13.9 percent.

The company, founded in 1897, went national after World War II. It has manufacturing plants in California and Tennessee, plus initial processing plants near the sources of fruit. Like many food products, Smucker’s are marketed through a national network of food brokers, whom the company spends time and money cultivating.

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Smucker’s, which competes across the country against such names as Welch and Kraft, plus a variety of regional brands and house labels, has a 32 percent market share. But that doesn’t mean there aren’t more worlds to conquer. ”There are brands that have more than 50 percent market share,” Mr. Smucker notes. ”Campbell’s soups, for example.”

The company’s headquarters are in Orrville, a small northeastern Ohio town that appears only on the more comprehensive maps; the plant is a bit north of the railroad, and a bit south of where the edges of town melt away into farmland and cow pasture.

Taking a visitor on a plant tour, Timothy Smucker, president of the company and the chairman’s son, stops at the entrance to the plant to ask, ”What are we making today? Grape?”

”Black raspberry!” comes the response from a crewman just emerged from the steamy plant. He is a veritable walking Jackson Pollock, his white uniform spatter-printed in shades of purple.

Once inside, the visitors are greeted by the fragrance wafting from the lagoons of seedless black raspberry jam in process. The olfactory delights are less than overwhelming, though, because technology returns the fragrant steam (”essence”) to the kettle to make a more flavorful product.

Earlier, Tim Smucker has apologized for having to ask everyone in the group to take off watches and rings and to put on silly-looking hats to keep hair and other unintended ingredients out of the jam – as he has done himself. ”I hate to have to ask it, but I couldn’t ask all the people who work here to do it if I didn’t do it myself.”

Indeed, ”treating people right,” along with ”making a quality product” is the Smucker credo.

But how does a ”breakfast oriented” company succeed in a society where many people’s mealtimes have degenerated into refueling stops and breakfast has almost completely evaporated?

”People aren’t eating as much breakfast as they should,” company officials concede. ”But our food-service business is doing very well. Wendy’s, for example, is a good customer.”

The ”portion control” servings, those individual plastic ravioli stacked in metal racks on restaurant tables, have been a booming business and have afforded extra visibility for the Smucker name.

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Along with the food-service and grocery operations, Smucker’s serves industrial markets (products sold to other food companies, e.g., as flavor for yogurt) and government (principally military) and export sectors. Smucker executives traveling abroad report that good old-fashioned peanut butter and jelly is a big hit in Singapore.

Not every product Smucker’s tries is a success, though. A notable example was pickles. ”We found that the pickle business was more a commodity business,” says Paul Smucker. It was fiercely price-competitive, whereas jams and jellies were more of a value-added product line. Consumers, he contends, respect the extra quality of the jams and jellies and more or less ungrudgingly pay the extra cost; they proved unwilling to do that for pickles. The pickle line was sold in 1983.

With some clearly labeled exceptions, Smucker’s sticks closely to natural ingredients – although, ironically, the term ”preserves” gives some people the wrong idea. Smucker’s was also a pioneer in straightforward nutritional labeling.

When Smucker’s bought the Magic Shell chocolate ice cream topping, the company reformulated the recipe to include real chocolate.

In response to consumer concern about sugar, Smucker’s came out in 1978 with a ”spread” so low in sugar the Food and Drug Administration won’t let the firm call it ”jam.”

The company has declined to get involved in making private-label jams and jellies – ”Heresy!” the chairman exclaims. ”That would be detrimental to our growth. Staying away from private labels ”is the only good decision I’ve made since I’ve been here,” he says.

Outside observers give the company good marks for getting involved in the gourmet jams business through the acquisition, in 1979, of the Dickinson line. The Smuckers insist, though, that the only difference between Dickinson’s jams and the ones with their own name on the jar is that Dickinson’s are made with a single variety of fruit – Blenheim apricots or Willamette red raspberries, for example – instead of a blend.

Smucker’s is publicly held and its shares are traded on the New York Stock Exchange. But this family-run company in northeastern Ohio is not altogether pleased about being up there on the Big Board – where its stock has been trading around $39 a share. ”If it wasn’t for the inheritance tax problem, we wouldn’t have gone public. But we had a choice between going public or selling out,” says Paul Smucker.

The family retains a 30 percent-plus interest in the business, and two other members are involved in management.

Family involvement makes Smucker’s an attractive long-term investment, says Elliott L. Schlang, an analyst with the Cleveland brokerage of Prescott, Ball & Turben Inc.: ”The management … has their own money on the table with the shareholders’, and I like that.”

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Category: WHY