Image source: The Motley Fool.
JM Smucker Co (SJM -2.84%)
Q3Â 2019 Earnings Conference Call
Feb. 26, 2019, 8:30 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning and welcome to The J. M. Smucker Company's Fiscal 2019 Third Quarter Earnings Conference Call. This conference is being recorded and all participants are in a listen-only mode. (Operator Instructions) I will now turn the conference call over to Aaron Broholm, Vice President Investor Relations. Please go ahead, sir.
Aaron Broholm -- Vice President, Investor Relations
Good morning, and thank you for joining us on our fiscal 2019 third quarter earnings conference call. Mark Smucker, President and CEO, and Mark Belgya Vice Chair and CFO will provide our prepared comments. Also participating in the Q&A are, Tina Floyd, Senior Vice President and General Manager, Consumer Foods; Dave Lemmon, President Pet Food and Pet Snacks; and Joe Stanziano, Senior Vice President and General Manager, Coffee.
During today's call, we will make forward-looking statements that reflect the Company's current expectations about future plans and performance. These statements rely on assumptions and estimates and actual results may differ materially due to risks and uncertainties. I encourage you to read the full disclosure concerning forward-looking statements in this morning's press release, which is located on our corporate website at jmsmucker.com. Additionally, please note the Company uses non-GAAP results to evaluate performance internally as detailed in the press release.
We have posted to our website a supplementary slide deck, summarizing the quarterly results and fiscal 2019 full year outlook. The slides can be accessed through the link to the webcast of this call and will be archived on our website, along with a replay of this call. If you have additional questions after today's call, please contact me.
I will now turn the call over to Mark Smucker.
Mark T. Smucker -- President and Chief Executive Officer
Thank you, Aaron. Good morning, everyone and thank you for joining us. It was great to see many of you last week at CAGNY, and we appreciated the opportunity to provide an update on our strategy and preliminary thoughts on fiscal 2020 financial guidance. Our outlook across the businesses reinforces why we remain excited about the long-term prospects for delivering on our three key financial priorities of topline growth, prudent cost management and delivering earnings-per-share growth.
Our efforts to position our business for growth and execute on our priorities continue to pay off this quarter. We achieved year-over-year sales and gross margin growth ahead of our projections and adjusted earnings per share came in better than our expectations through favorable SD&A. Overall, we are very pleased with the third quarter results and the momentum we are starting to build to advance our consumer-centric strategy.
We delivered strong sales performance for our growth brands, which increased 17% in the quarter. We also achieved strong growth for some of our leading brands, our core brands, demonstrating our ability to increase sales for both core and growth brands. Multiple brands in our pet business achieved double-digit sales growth, including Rachael Ray Nutrish, Meow Mix, Kibbles 'n Bits and Nature's Recipe.
Further Smucker's Uncrustables and Sahale Snacks also realized double-digit sales growth. While Dunkin' coffee achieved 9% sales growth, including strong performance across premium bag, and the recently launched canister offerings.
Notably, Folgers within the US Retail Coffee segment was flat in the quarter. Collectively, the gains were partially offset by weakness for Folgers in the International and Away From Home business, Natural Balance and declines related to the planned exit of certain private label pet food and Gravy Train wet dog food products.
Excluding the Ainsworth acquisition, and prior year net sales attributed to the divested baking business, organic net sales increased 1% compared to the prior year. Our adjusted earnings per share performance reflects net sales growth, gross margin improvement, achievement of acquisition synergies and the benefit of consolidating certain geographic locations.
Additionally, marketing spend was below our initial expectations because certain expenses shifted to the fourth quarter as delayed retailer shelf resets slowed some innovation launches and related support. But, despite the shift, marketing spend was up over $30 million compared to the prior year, reflecting the addition of Ainsworth and innovation support for the base businesses.
With growth in a number of areas contributing to our third quarter results, we continue to make progress on our three consumer-centric growth imperatives of leading in the best category, building brands consumers love and being everywhere.
I'll share a few examples of how we are executing against this framework, beginning with leading in the best categories. US Retail Coffee segment sales growth was driven by the premium Dunkin' and 1850 brands. Our total K-Cup sales continued to outpace the category with net sales up 4% in the third quarter. The 1850 brand -- the 1850 brand coffee continues to perform with repeat rates exceeding our initial projections and a 75% ACV.
We are increasing emphasis on consumer trial through continued brand support. Last week, we announced two new single origin varieties to complement the current 1850 lineup and we remain confident in continued growth for the platform, which leverages the heritage and authenticity of the Folgers brand to attract new consumers. We are also strengthening the Folgers brand with the upcoming launch of a new line of dark roast coffee under the Noir platform, filling a void in the canister segment for dark roast varieties.
Sales growth within our Pet Foods segment reflected contributions from the Ainsworth acquisition. Momentum for the Nutrish and Nature's Recipe brands continued in the quarter, with year-over-year sales growth of 23% and 11% respectively despite increased competitive activity. Initial shipments of our pet treats innovation primarily for the Milk-Bone and Nutrish brands began late in the third quarter, and we remain on track to achieve 3% to 4% incremental new points of distribution for the total pet business. Finally, in the Pet segment due to sustained input cost inflation, we successfully implemented a price increase across our pet food portfolio effective this month.
Turning to our strategic imperative of building brands consumers love. We are following through on our commitment to increase marketing investments to support our innovation and growth brands.
As I mentioned, in the third quarter, our marketing expense increased over $30 million compared to the prior year. A higher level of marketing and innovation support, coupled with a more agile go-to-market approach is critical to achieving an anticipated high-single-digit net sales increase for growth brands over the next five years. Combined net sales for growth brands are projected to increase 18% for the full 2019 fiscal year.
We will also continue to invest in core brands to achieve our net sales growth target. As we highlighted at the CAGNY conference last week, with updated marketing behind the mature Meow Mix brand, consumption increased over 4% since the campaign launch and net sales were up 10% in the third quarter.
The third growth imperative we are focused on is to be everywhere. How, where and when consumer shop is more than ever on demand and multi-channel. We think about both traditional and new retail channels as a single ecosystem, where our brands must stay current and breakthrough among increasing choices for consumers. Within the e-commerce channel, we have a strategic advantage by participating in fast-growing online categories.
We continue to achieve very strong e-commerce growth in both coffee and pet food as our brands continue to keep pace with or exceed their respective categories' online growth. Within our Away From Home business, our focus is on branded offerings within these channels. For example, the upcoming launch of 1850 coffee and food service channels further supports our intent to be everywhere. Having our brands available wherever consumers shop, eat or grab something on the go. Also with the launch of Jif portion control offerings, consumers will now be able to enjoy the number one peanut butter brand in lodging and restaurants.
Finally, with respect to being everywhere, we are increasing consumer engagement through digital platforms in addition to traditional channels. Our digital efforts have been instrumental in connecting with consumers for 1850 and Jif Power-Ups.
In closing, we have a strong brand portfolio and are committed to maintaining investments particularly in marketing to deliver growth and strengthen our brand's connection with consumers. The components of our strategy are coming together as thoughtful cost management, reinvestment in the business, reorganize commercial functions, including sales and marketing and strong execution have created momentum for growth and increasing shareholder value. None of this would be possible without our great team of dedicated employees to execute this strategy. And I would like to thank all of them for their continued efforts.
I will now turn the call over to Mark.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Thank you, Mark. Good morning, everyone. Let me begin by providing further detail on the impairment noted in our press release this morning. Our third quarter GAAP results included a non-cash charge of $107 million attributable to certain indefinite-lived trademarks within the Pet Foods segment. This reflects a strategic shift for certain brands from the Big Heart Pet Brands acquisition, resulting in a reduction of their long-term sales forecast. Our long-term organic growth projection for the overall Pet business remains unchanged in part due to the anticipated growth related to Rachael Ray Nutrish and innovation across the portfolio.
With that, let me now provide an overview of third quarter results. I will then conclude with an update on our full year outlook. Adjusted EPS was $2.26 compared to $2.50 in 2018. There were several factors that affect comparability to the prior year's results, which I will note as I provide additional details on the quarter. Net sales increased 6% driven by the acquisition of Ainsworth. Excluding Ainsworth, and the impact from the US baking divestiture, net sales increased $14 million or 1%.
Favorable volume/mix in Coffee and Consumer Foods offset a $5 million foreign exchange headwind during the quarter. And net price realization was neutral. Adjusted gross margin expanded to 38.6%, increasing 20 basis points compared to the prior year and a sequential improvement of 40 basis points over the prior quarter. Excluding Ainsworth, which impacted gross margin by 50 basis points, and the margin benefit of divesting the baking business, the gross profit improvement was a result of favorable volume/mix and lower costs.
SD&A increased $43 million or 13% compared to 2018. Marketing expenses increased $31 million or 31%, reflecting the addition of Ainsworth and support for recent product launches. General and administrative expenses increased $5 million or 5%, reflecting the addition of Ainsworth, mostly offset by synergies and cost management benefits. Factoring in all of this, adjusted operating income increased $5 million or 1% compared to the prior year.
Below operating income, interest expense increased $9 million, driven by borrowing cost associated with the Ainsworth acquisition. A $4 million increase in other expense was driven by pension settlement and increased legal expenses. The adjusted effective income tax rate was 25.8% in the quarter.
Let me now turn to segment's results, beginning with Coffee. Net sales increased 2% compared to the prior year. The increase was primarily attributed to the Dunkin' brand driven by roast and ground in both bag and canister format. Sales for the Folgers brand, inclusive of 1850, were unchanged from the prior year as higher volume/mix was offset by lower pricing through increased trade spend as lower green coffee costs are being passed through to consumers. Coffee segment profit increased 1%, reflecting the favorable volume/mix and the net benefit of price and costs, which more than offset a 47% increase in marketing spend.
In Consumer Foods, net sales increased 4%, excluding the non-comparable sales related to the divested US baking business with both Jif and Smucker's up compared to the prior year. Sales for the Smucker's brand was driven by Uncrustables, which increased 12%, more than offsetting declines in food spreads. Net sales for Jif increased 5%, reflecting the contribution from Power-Ups and volume/mix gains in peanut butter. Sahale Snacks sales increased 63%, driven by gains in volume/mix and favorable net pricing.
Segment profit decreased 21% in the quarter. Excluding the prior year profits from the US baking business, segment profit declined 6% due to increased marketing on Jif Power-Ups and costs associated with the construction of the new Uncrustables facility.
Turning to the Pet Foods segment. Net sales increased 35%, reflecting the addition of Ainsworth. Excluding Ainsworth, net sales were flat to the prior year, although the planned exit of certain private label offerings and the planned discontinuation of Gravy Train wet dog food products impacted sales by 3% or $19 million. Nutrish sales increased 23% compared to the prior year, with robust growth across all segments of the dog food, cat food and snacks.
Gains in Meow Mix and Kibbles 'n Bits were partially offset by declines for Natural Balance in Milo's Kitchen. The decline in Natural Balance reflects ongoing softness in the pet specialty channel, which is not being offset by growth in e-commerce.
Pet Foods segment profit increased 26% compared to the prior year, again driven by the profit contribution from Ainsworth. Excluding Ainsworth, segment profit was flat compared to the prior year.
And lastly in the International and Away From Home segment, net sales declined 6% compared to the prior year. Volume/mix declined most notably for Folgers and Crisco were partially offset by growth for Smucker's Uncrustables and portion control products. Unfavorable FX, lower net price realization, and non-comparable sales in the prior year from the divested baking business also contributed to the sales decline.
Segment profit decreased 2% as the impact of reduced volume/mix and foreign exchange were partially offset by decreased marketing expense and the net benefits of lower pricing and cost.
Third quarter free cash flow was $333 million. This represented a $56 million decrease compared to the prior year, reflecting reduced benefits from working capital improvements, primarily driven by inventory. During the quarter, we repaid $300 million of long-term debt, while increasing our short-term borrowings by $114 million (ph). This resulted in a net debt reduction of $186 million and a debt balance of $6.1 billion as of January 31. Based on a trailing 12 month EBITDA of approximately $1.6 billion, our leverage ratio stands at 3.8 times.
Let me conclude my comments with an update on our full year outlook. As noted in this morning's press release and last week at CAGNY, we maintained our full year guidance. Expectations for net sales and gross margin remain unchanged with fiscal year net sales of $7.9 billion and estimated gross margin of 38%. Adjusted earnings per share is expected to be in the range of $8.00 to $8.20.
Key factors included in this forecast include better-than-anticipated third quarter results, a shift in certain marketing expenses from the third quarter to the fourth, the price decline on Jif peanut butter effective in March and a full year tax rate of 26%, reflecting fourth quarter rate comparable to the third quarter. Our projection for free cash flow remains in the range of $700 to $750 million with CapEx estimated at $350 to $370 million.
In closing, let me reiterate that we are very pleased with this quarter's results and feel confident in delivering on our guidance for the year. Thank you for your time this morning and we'll now open up the call to your questions.
Operator, could you please queue up the first question?
Questions and Answers:
Operator
Thank you. The question-and-answer session will begin at this time. (Operator Instructions) Our first question comes from Andrew Lazar of Barclays. Please state your question.
Andrew Lazar -- Barclays Capital -- Analyst
Good morning, everybody.
Mark T. Smucker -- President and Chief Executive Officer
Good morning, Andrew.
Andrew Lazar -- Barclays Capital -- Analyst
Hi, first question would just be -- you noted some shifting of marketing spend from 3Q to 4Q. Was there any other shifting? The topline obviously was quite a bit better, particularly in consumer than we had modeled with the underlying as you mentioned being up four, and if there's anything that shift in relation to either the change in -- the cadence of SNAP spending to consumers or things of that nature that might have affected inventory at retailers, one way or the other. Just trying to get a sense of the sustainability of the type of trends that you showed, particularly in consumer on the topline?
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Hi, Andrew. It's Mark Belgya.
Andrew Lazar -- Barclays Capital -- Analyst
Hey, Mark.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Thanks for the question. I would say that we wouldn't -- don't call anything specific to SNAP or any other specified programs. We obviously over-delivered sales in Coffee, in the business generally above what we thought, but there was nothing significant. One thing I might just take the opportunity to call out as we do look for the fourth quarter month P&L.
So you had mentioned and we had mentioned an increase in marketing, so that would certainly be a little bit of a flip between the two quarters, and then we'll also see the impact of the new pricing on peanut butter that will go on effect in the fourth quarter In March, the higher tax rate and then, although it was forecasted originally, but it's kind of new news to you guys, is that -- with the construction at Longmont, we are going to see a step-up in those costs in Q4 over last year's Q4 of about $0.04. So those whatever was three or four factors or things that you guys can just consider as you think through your fourth quarter outlook, but to the original question, I would say, there was nothing significant that would -- we would call out as a timing differences in marketing.
Andrew Lazar -- Barclays Capital -- Analyst
Great, thank you for that. And then just the second one would be the sustainability of Pet segment margins. Obviously a very big step forward -- a leap forward from where you were in fiscal 1H and certainly part of that I know is the synergies that are flowing through from Ainsworth and such, but even when you adjust out some of the inventory step-up from Q1, the progress in Pet margins was much more significant than we had modeled. So just want to get a sense of your confidence there and the sustainability of the margin structure moving forward impact? Thank you.
David J. Lemmon -- President, Pet Food and Pet Snacks
Yeah, Andrew, it's Dave Lemmon here. I would say that we're really pleased with our margin progression on the business. Q3 we were 19.4% versus Q2 of 17%. So saw great progression against margins. You mentioned synergy capture, but I would just say that as we move to the back half, we expect to capture the bulk of the synergy related to year one in the back half, so that would be one thing contributing to our margin expansion. The other thing is that, we've just taken a price increase on food, but we have the benefit of price increase on snacks and Natural Balance in -- throughout the fiscal that would help our margins.
And then just sort of thinking longer term, we have network optimization, which is going to be kicked off later this fiscal. Portfolio management will continue with things like you saw our action on Gravy Train wet gravy and then we plan to launch margin-accretive innovations that will also help our margins. So we feel really good that the margin levels that we see today will be sustained, if not enhanced.
Andrew Lazar -- Barclays Capital -- Analyst
Great. Thanks, everybody.
Operator
Our next question comes from David Driscoll of Citi. Please state your question.
David Driscoll -- Citigroup -- Analyst
Great, thank you. Good morning, everybody.
Mark T. Smucker -- President and Chief Executive Officer
Good morning.
David Driscoll -- Citigroup -- Analyst
I just wanted to confirm, Mark Belgya that the Uncrustables facility start-up you said that was -- I think you said it was $0.04 per quarter on a go-forward basis until you're -- I think you just said next quarter, but I would assume that's $0.04 per quarter until you finish the start-up, but is that correct or is it just $0.04 next quarter?
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Hey David, it's Mark. It was -- that quote was specifically to fourth quarter of this coming year. We'll give you more color on the total cost. We did -- as you recall, we did call Longmont expenses out as impacting both fiscal 2020 as well, but (inaudible) but the $0.04 was just specific to Q4 of this fiscal.
David Driscoll -- Citigroup -- Analyst
Okay. And then on pet food, you called out the asset impairment and you said that overall your expectations are not changed, but an asset impairment means that management's lowered the revenue expectations, which is why you get the impairment. What was the counterbalance right there? Did you actually raise your expectations for Rachael Ray? And then related to things in pet, are you exiting all the private label pet food that Ainsworth did and just what's the implication of that on the business?
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Okay. David, it's Mark again. I'll start and then I'll let Dave also speak. So let me just kind of ground everyone on the impairment. So impairment was specific to trademarks and I have to give you all a lesson here, but the trademarks are based upon future topline growth where goodwill is based on profitability. So the trademark implication or impairment was due to -- we made some strategic decisions that Dave and team have been going through is the strategy and thus we are reducing topline forecast for certain brands that drove the trademark impairment that we took this quarter. We feel that long-term because of the addition of the profitability of Ainsworth and all the things that Dave has talked about or will talk about, we think that the profitability and the topline growth is still good where we are not facing a goodwill charge. So right now, the only thing was on the trademark.
As we have consistently said in our 10-Q and our 10-Q will be issued later today and I would just direct you all to read that, is that we do know that because fair value and book value are close that any significant changes in any future forecast could result or would result in additional impairment. But right now, we feel the base business with all the growth opportunities should not cause a goodwill impairment this time.
David J. Lemmon -- President, Pet Food and Pet Snacks
And Dave just to answer your question on private label, we're still very committed to the private label business. As you know, we pack sort of the premium, private label on dry dog and sort of the value equation on wet cat. The exits were planned exits related to the legacy business on pet, on private label pet, but the -- all the business that's associated with APN and we will continue to service those customers and meet their needs.
David Driscoll -- Citigroup -- Analyst
Okay, thank you. Nice quarter. I'll pass it along.
David J. Lemmon -- President, Pet Food and Pet Snacks
Thanks, Dave.
Mark T. Smucker -- President and Chief Executive Officer
Thank you.
Operator
And our next question comes from Ken Goldman of J.P. Morgan. Please state your question.
Ken Goldman -- J.P. Morgan -- Analyst
Hi, good morning. Thank you.
Mark T. Smucker -- President and Chief Executive Officer
Hi, Ken.
Ken Goldman -- J.P. Morgan -- Analyst
First question is on Natural Balance. And I know this question has been asked before, I'm just hoping for an update on your thoughts. A few years ago, it was Natural Balance and Blue Buffalo and those were the sort of big hitters at least perception wise at the super premium end in pet superstores. And since then, your big competitor Blue has made a lot of choices that have grown and or about to grow its sales pretty dramatically. And I think those are the right choices in many ways because of what we're seeing with pet superstores. And I don't feel like Natural Balance has made those same choices.
So I'm just curious, is it too late for Natural Balance brand to sort of expand its distribution platform, if you will? Have you made some mistakes there? What do you think the options are for it to grow, because it was such a great brand and I feel like we just don't hear much about it anymore, it's sort of been put on the back-burner?
David J. Lemmon -- President, Pet Food and Pet Snacks
Ken, it's Dave Lemmon here. I would say, as I said on previous calls, we're not happy with the performance on Natural Balance. But, and we're going to continue to be a consumer-led brand in the pet specialty arena. So we're committed to that channel and we will be committed to that channel for the longer term and we have, what I feel is a strong plan to turn the results around, but it won't happen overnight. I would say, but in the near term, we're celebrating our 30th year anniversary of the brand. So we have a lot of display and promotional activity behind the brand coming in Q4 or through the first half of next fiscal.
We're relaunching the Ultra brand with new graphics and a focus on L.I.D. We're focusing on pet specialty and regaining back our store level recommendations, which are critical to the brand. And then over the longer term, we are focused on a new marketing strategy that will drive brand awareness and increase household penetration and bring new users into the franchise.
And lastly, I would say that we're really focused on our e-com strategy in building the brand in this important channel through a pricing strategy that meets the needs of the channel and through innovation that meets the needs of the channel. So, we think with the combination of those five or six factors that I've outlined that we will be able to return the business to growth.
Ken Goldman -- J.P. Morgan -- Analyst
Can I use my second question for a follow-up to that? I don't quite understand. I understand there's a new marketing strategy. I understand the emphasis on e-com, but why the reliance still on pet specialty? And why -- you say there is a good plan to turn it around, what is that plan? In pet specialty, it's no secret, is heading south. I don't think anyone really is expecting it to start growing very quickly again. In the meantime, there is arguably a missed opportunity in food, drug mass that your biggest competitor has taken and I don't quite understand, why you're letting all that shelf space go to your biggest competitor.
David J. Lemmon -- President, Pet Food and Pet Snacks
Well, I'd say a couple of things. The first thing is that as a brand that we've chosen to have it sold only in that channel and exclusive to that channel and the pet is still growing and growing quite nicely. Big box retailers in the pet specialty arena are declining, but we think that there is growth to be had in the pet and the pet specialty sort of pushes out on Petco's announcement with being focused on ingredients and so forth. We think that we want to stay committed to the brand and that in the pet specialty arena and that'll be our go-forward position.
Mark T. Smucker -- President and Chief Executive Officer
Ken, it's Mark Smucker. I guess I would just add. There's been a lot of focus on this brand, and of course, I think Dave outlined very well, what the turnaround plan is, but we've got clearly a lot of effort and work to do in the mainstream channels with Nutrish and Nature's Recipe, both of which are continuing to perform and in aggregate are much larger than the Natural Balance opportunity and they fill a, I would say a unique spot in the premium tier, where you've got some of the other competition as I highlighted I think at CAGNY last week. It's a very broad priced category.
So we've got -- there's plenty of room I think for these multiple competitors to play and we're going to remain focused on that and we will -- as Dave highlighted, make sure that we are doing the right things for the Natural Balance brand, but we just feel like our strategy and the channels in which our brands play today is right.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Hey, Ken, just -- this is Mark Belgya, not to pile on, but I think we also do have -- keep in the context, the relative size of Natural Balance. It's 10% of the entire pet business. So not to minimize the commentary and the question, but just for the benefit of everyone on the phone to dollarize that.
Operator
Our next question comes from Chris Growe of Stifel. Please state your question.
Christopher Growe -- Stifel Nicolaus -- Analyst
Hi, good morning.
Tina Floyd -- Senior Vice President and General Manager, Consumer Foods
Good morning.
Christopher Growe -- Stifel Nicolaus -- Analyst
I wonder if I could ask a follow-up question in terms of the marketing shift into the fourth quarter. Forgive me, if I missed this, but do you -- have you said how much of this shift from Q3 into Q4, just kind of get our model straightened away here?
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Hey, Chris. It's Mark -- Mark Belgya, sorry. Yeah, we would say that the impact of marketing is about a $0.03 to $0.04 impact between Q3 to Q4.
Christopher Growe -- Stifel Nicolaus -- Analyst
Okay. So relatively modest shift it sounds like?
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Yeah, yeah.
Christopher Growe -- Stifel Nicolaus -- Analyst
Okay. Thank you. And then just want to ask there was -- there's been a lot of talk of accelerated sales growth in the month of January, in particular SNAP benefits pushed back and I know there's been some inventory build at some retailers. I'm just curious of reuse (ph), if that help your quarter at all, where you see your retail inventory levels overall in any businesses that may have benefited from that phenomenon, if it occurred?
Tina Floyd -- Senior Vice President and General Manager, Consumer Foods
Yeah. I can jump in. This is Tina. You would think that peanut butter may have had some impact with regards to SNAP, but we didn't see really anything significant that would have changed anything within our peanut butter business.
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Yes, this is Joe. I would say the same thing on Coffee, pretty consistent, as we move into the fourth quarter. And just generally, Chris, I would say nothing -- as I -- it's held earlier, that would indicate anything specific to inventory changes that retailers or anything like that. It was pretty much a normal flow of goods throughout the end of the quarter.
Christopher Growe -- Stifel Nicolaus -- Analyst
Okay. That's great. I appreciate your time this morning.
Operator
Our next question comes from Bryan Spillane of Bank of America. Please state your question.
Bryan Spillane -- Bank of America Merrill Lynch -- Analyst
Hi, good morning.
Mark T. Smucker -- President and Chief Executive Officer
Hi, Bryan. Good Morning.
Bryan Spillane -- Bank of America Merrill Lynch -- Analyst
Just two questions. One just related to the fourth quarter the guidance for the fourth quarter, you've got still a pretty wide EPS range, but like a point estimate on revenues, tax rate. So just trying to understand what's the variability in the fourth quarter, might it be timing, some of this marketing might shift to the first quarter of next year or trying to understand what potential volatility there could be in the fourth quarter?
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Yeah, Bryan. It's Mark. I would just say there's probably three or four things that we kind of commented on them. Certainly, the one that stands out the most is the shift -- price increase or price decrease that goes effective next month. I mean we've obviously factored in estimated price decline in volume gains and so forth, but until that's in (ph) market we need to see that. But short of that, there is nothing, I would say significant in that range. We've been consistent with that range throughout the year and what we tried to do with my earlier comments to Andrew was just give you a sense of the three or four things that you guys may not had color on it, as you think through your fourth quarter, but certainly the high-end would just be continued benefits from innovation and just the continuation of the trends that we saw come out in Q3. So if there's anything, it was probably a little bit of conservatism built into that around the topline growth that we did over deliver above our expectations.
Bryan Spillane -- Bank of America Merrill Lynch -- Analyst
Okay. And then just a follow-up on -- Its a pretty good result in Coffee in the quarter and looks like your K-Cups did pretty well as well. And Keurig had probably a better merchandising around brewers for the fourth quarter. So was there any sort of notable change in the category or change in your business just related to some of the things that Keurig has done to try to stimulate household adoption?
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Yeah, Brian. Hi, it's Joe. I think we've been pretty consistent with how we've approached the K-Cup merchandising. We did have a good Q3. I would say, and we talked a little bit about it, I think, the last quarter. Some of the work that Keurig has done on the entry level brewers has really helped us in key customers and key channels, especially for brands like the Folgers brand and seeing an adoption and an increased sales velocity in that brand. So we continue to be positive about all four of our brands in the K-Cup segment.
Bryan Spillane -- Bank of America Merrill Lynch -- Analyst
Okay, great. Thank you.
Operator
Our next question comes from Jason English of Goldman Sachs. Please state your question.
Jason English -- Goldman Sachs -- Analyst
Hey. Good morning, folks. Thank you for spotting me in. I appreciate that.
Mark T. Smucker -- President and Chief Executive Officer
Good morning, Jason.
Jason English -- Goldman Sachs -- Analyst
Well, good morning. I wanted to come back to pet real quick. Can you give us any quantification of the price increases that you're pushing through on the food side? And any indication of whether or not any of your big competitors like Morrison, Nestle, et cetera have led or followed?
David J. Lemmon -- President, Pet Food and Pet Snacks
Yeah. This is Dave Lemmon here, Jason. Thanks for the question. As you know, we follow on food, so it would be safe to say that our big competitors led on pricing. In terms of the volume impact, we've modeled that in. So all of the impacts would prefer -- with respect to volume have been reflected in our guidance for next quarter. And I'd just like to say, we took food off in the first quarter, we took natural balance up in the fourth quarter. So in effect, we've taken our entire lineup of pet food up in price over the last 12 months. So it's been a great job by the sales team and by selling it in to our customers.
Jason English -- Goldman Sachs -- Analyst
Great. Would love it, Dave, if you could give me any quantification of that price increase, if possible? And then my second question, you guys mentioned that you've over-delivered on Coffee sales this quarter. Clearly, volume was very strong. Congratulations on that. It does however contrast what we've seen in the Nielsen or IRI data. Can you give us any indication of where you're sourcing that volume, general wise?
David J. Lemmon -- President, Pet Food and Pet Snacks
Yeah, hey Jason, It's just, Dave. Sorry I didn't close the loop on the last -- first question, but we won't be sharing the amounts that we took. But you can be safe to say that they were in line with our competitors.
Jason English -- Goldman Sachs -- Analyst
Understood.
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Hey Jason, it's Joe. Yeah, from a coffee perspective, again, I think when we look at the third quarter from an IRI perspective, actually we did grow share in mainstream in the 12 week up about 0.6 of a share point, driven mainly by the Dunkin' canister launch in Bustelo. However, Folgers roast and ground net sales were flat in Q3, and that is an improvement over Q1 and Q2. So while we continue to work on the Folgers core business and we're excited for the launch of the Folgers Noir product that you saw last week, we think that is really important innovation to bring into the mainstream canister category; a line of dark roast product that really, we believe, is missing in that segment. So continue to work toward improvement there.
Mark T. Smucker -- President and Chief Executive Officer
Jason, this is Mark Smucker. I guess I would just add a general comment about our support of these brands is, we're pretty happy with the results this quarter, particularly in the sense that we've seen multiple examples of when we, when we put some support behind these core brands we get response that we've seen that with Meow Mix, Kibbles 'n Bits and then now more recently, seeing some improvement on Folgers. And so, it's just a comment that it does work, the strategy does work and then also as it relates to Jif specifically and Folgers when you factor in 1850 and Jif Power-Ups both of those were helping the brands and so again just more confirmation that we're doing the right things and we're starting to see a little bit of momentum and see our strategy play out successfully. So I'll stop there.
Jason English -- Goldman Sachs -- Analyst
Right on. Thank you, guys. I'll pass it on.
Mark T. Smucker -- President and Chief Executive Officer
Thanks.
Operator
Our next question comes from Rob Dickerson of Deutsche Bank. Please state your question.
Rob Dickerson -- Deutsche Bank -- Analyst
Great, thank you. I guess my first question is just on pet, kind of more generally, it sounds like you said this morning, pet's new distribution points of 3% to 4% (inaudible) you kind of stated, you didn't really expect that much share encouraging coming in mass (ph) Blue just off of the datasets you've seen.
So just kind of curious, is it others could be losing shelf like you could be losing some skews off of maybe larger bags or more mainstream or retailers expanding categories for footage, I'm just trying to get a sense of as to why you specifically, let's say, other premium brands within mass would not lose share just if someone else comes in unless if you're trying to premium up the entire category and in others in mainstream where we can share. So just kind of any general comments as to what you think plays out over the next six to nine months in pet at mass? Thanks.
David J. Lemmon -- President, Pet Food and Pet Snacks
Rob, I have a few comments I'd make and just -- I'd start by saying that on previous calls and it's further sort of supported now, we have limited interaction with Blue. And as we look at the data, we've co-existed for over a year now in many accounts in both our Nutrish and Nature's Recipe brands have continued to maintain or grow share consistently over that time.
Blue is much higher priced than both Nutrish and Nature's Recipe and is attracting a really different consumer base, I would say. The whole notion of super premium versus premium and they attract a much -- our consumer is willing to pay much, much more for food. And then the last thing I would say is that, we have a huge pipeline of innovation coming behind Nutrish and Nature's Recipe that will help sort of kind of insulate us from their entry.
We are one of the only manufacturers or very few manufacturers to receive incremental shelf space or PODs and it's because of our new platforms across both these brands. And then from a shelf space perspective, I'd just add that Blue is going to definitely add some pressure to the shelf space as they continue to crossover, it is yet to seen who or what segments will be impacted by that.
But if you want my opinion, I'd say that the shelf space will continue to come from, primarily the value segments to a lesser extent the mainstream segments as retailers continue the journey of trying to trade up the consumer to premium dog food and premium pet and I would anticipate the value segment being reduced through the elimination of duplication and that they will probably try and make that shelf space much more efficient moving forward which we will try to take advantage of and we're well positioned for across our portfolio offering both value mainstream premium and super premium. So we feel really good about how we're going to defend against Blue coming over to and continue to cross over into FTM (ph).
Rob Dickerson -- Deutsche Bank -- Analyst
Okay, fair enough. Thank you. And then in terms of price decrease. You mentioned forthcoming in peanut butter. I guess the simple question is, is that -- do you think that's the only category where you might have to lean in a little bit into pricing. It sounds like peanut butter is more or less, but we have seen what seems like a little bit heightened promotional activity in coffee. So I'm just curious if there are other areas you think you might lean in into price and then more specifically on coffee. Do you feel pretty standard sort of speak as to where your pricing is now or could you potentially need to promote a bit into the spring? Thanks,
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Hey, Rob. It's Joe. From a coffee perspective, we have obviously this year kind of continue to reflect the green price and stayed very competitive on shelf. We're comfortable as we go into fourth quarter with our price and promotional strategy. Obviously, we continue to watch the green market as we go into next year, but as we sit here and look to fourth quarter, we feel like we're in a good place.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Hey, Rob. It's Mark Belgya. Just maybe conclude the question is that you'll recall coming into the year, we were talking about, just overall cost and we said that green coffee was going to be down. It's obviously continue to be and to Joe's comments on how that's been passed through. And then, but the rest of our cost whether with packaging ingredient et cetera, we're up and the most affecting Tina's business and Dave's business. So I think you've heard, we took the pricing on Dave and the only notable decrease in Tina's area is peanuts, and so we are, as we said, we are passing that through.
But otherwise, if you look at price having to come from cost supported, it's really green coffee costs and peanuts costs, the two that are moving the rest are, they are where we expected and thus wouldn't expect any cost-driven price off or price change off of that.
Rob Dickerson -- Deutsche Bank -- Analyst
Okay, great. And then just one quick one for you, Mark again Belgya. It's just, like why not have updated your guidance last week at CAGNY, gets us the kind of the direct question right is, Q3 obviously came in a lot better than people expected Q4, what I'm hearing is, there may have been some changes on peanut butter pricing that weren't expected for the year, the shift in marketing $0.04, which isn't that much. I'm not hearing much other deltas for the year.
So I mean I guess maybe the answer is, we just like to leave ourselves the cushion and be conservative. It's a competitive marketplace, but it seems like it's -- it may have been worthy of an increasing guidance yet, you just didn't do so, so I'm curious as to what the thinking was. That's it. Thank you.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Well, I guess what I would say to Rob is that, we still feel comfortable with the range and we purposely did not release and get into Q3 result results because we didn't want to use that format. We felt that was important, that's a long-term strategy discussion at CAGNY, wanted to save the commentary for here and I just wanted to have this conversation, but I think we've presented that we feel good that we will deliver within our guidance range and I don't really don't have much more to add to that.
Rob Dickerson -- Deutsche Bank -- Analyst
Okay, thank you.
Operator
Our next question comes from Akshay Jagdale of Jefferies. Please state your question.
Akshay Jagdale -- Jefferies -- Analyst
Good Morning. Thanks. Thanks for the question. First ones for Mark Smucker. Just in terms of the sort of a long-term strategy. Can you just tell us where price falls in? Your pricing strategy, obviously this year, one of the main reasons you've lowered your topline organic sales growth guidance is because of lower pricing in coffee, lower pricing in peanut butter and now peanut butter pricing on even lower.
So I know there's a lot of commodity pass-through, but at the end of the day, you've got these pretty aggressive organic growth targets for your main brands and some of them are obviously coffee, right.
So can you just level set us how like this year's results in overall just sort of these pass-throughs and strategic moves on pricing that seem to impact profit negatively in the short-term play into your long-term strategy of sort of high-single growth for your leading brands?
Mark T. Smucker -- President and Chief Executive Officer
Okay, Akshay. This is Mark Smucker. I guess I -- a couple things. First of all, our -- we've seen margin improvement this quarter. So I and -- our profit is improving and we intend to manage dollar profit.
As you know, we always say, our goal is to grow year-over-year our profit dollars and to the extent that we can achieve margin improvement that obviously is a secondary goal. As it relates to just pricing in general, you know, being able to take pricing upward down, particularly in categories that are commodity-driven is going to continue to be a very important part of our strategy and to maintain credibility with our retail customers as well.
We need to be somewhat transparent in terms of when we are moving that it is cost driven. And so as it relates to peanut butter specifically, we did actually take a pricing increase about a year ago and we saw no one follow and as peanut costs and the competition continues to be strongly, we felt that the right thing for the business is to make sure that our pricing strategy is right, that our price gaps are right.
And so that's really the reason for the move and it will cause us to be more competitive. And, but clearly at the end of the day, bottom line, pricing is important, our ability to do so is important and we've got to maintain that credibility with our customers and obviously pass things along to the consumer when we can.
Akshay Jagdale -- Jefferies -- Analyst
That's useful. And just one follow-up on pet as it relates to your 2020, a high level topline guidance. So it looks like you're expecting an improvement in organic growth obviously pretty significant one in 2020 overall for the Company and pet's going to have to obviously improve significantly. Some of that is the innovation pipeline. Right. But can you, can you just give us a sense of the improvement in pet.
How much of it is just innovation driving significant incremental growth and more importantly, how all of that fits into the competitive dynamics, right, like what, I think, people would like to hear is, you're taking a conservative approach on velocities. Given the entry of Blue, but just high level, like how you thinking about the improvement in pet organic growth over the next 12 months and what are the puts and takes there? Thank you.
David J. Lemmon -- President, Pet Food and Pet Snacks
Yeah. Akshay, it's Dave Lemmon here. I would say to touch on your question around innovation, we have a huge pipeline of innovation coming in the fourth quarter, which will be supporting all of our segments, new platforms for growth, meaning like new territories, we're taking the brands in terms of the segments, primarily focused around our snacks line with Milk-Bone being sort of the anchor of that effort. But still lots of news on our food business around Nutrish, Meow Mix, Kibbles 'n Bits and so forth.
We expect to deliver $100 million of net sales, incremental against our innovation, all of which will primarily come next fiscal. We had a delay in the mod resets of this year and so we expect that the bulk of that to hit us in next call. I would say that retailer acceptance has been great so far. Most of the resets are launching later in the fourth quarter. We've grown PODs by, you heard Mark say it, by 3% to 4% incrementally. So, we have great sort of growth coming from a POD standpoint.
And just on the other side, I would say that we expect organic growth from our brands and we going to deliver, share growth through investing in our brands and so sort of a balance between innovation and base business growth.
Akshay Jagdale -- Jefferies -- Analyst
Thank you. I'll pass it on.
Operator
Our next question comes from John Baumgartner of Wells Fargo. Please state your question.
John Baumgartner -- Wells Fargo Securities, LLC -- Analyst
Good morning, thanks for the question.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Hey, John.
Mark T. Smucker -- President and Chief Executive Officer
Good morning.
John Baumgartner -- Wells Fargo Securities, LLC -- Analyst
Just maybe for Joe and maybe if Mark wants to jump in, in terms of retail coffee, when we look at premium, it's about 15% of your portfolio. It's where it was five years ago and you're still under index versus the category. When we look at Nestle, you're going out acquiring Blue Bottle and Chameleon to kind of catch that millennial Gen Z consumer. How do you think about winning that jump ball in terms of developing brands internally versus augmenting with M&A. I guess what's different in coffee versus the pet business?
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Yeah, John, I can start and Mark can chime in. I mean obviously we've been focused on growing the premium side of the business obviously the Dunkin' brand continues to grow and we continue to support that.
There's great upside ahead of us there and the launch of 1850 was really to hit that squarely in the middle and we've been nine months into the launch now. We're very excited about what it's doing. But again, we're in the first inning here. We're going to be here for a long time, but we are doing the things we need to do. The third quarter saw focus on more trial and we saw an improvement in our trial numbers.
They are now just shy of our goal. Repeat continues to exceed our goal. And I think some of the key things to your point is, we're reaching the target consumer. We have a higher index with older millennials and Gen X. We continue to support the brand, learn and adjust the launch of 1850 and Away From Home is really important for our imperative to be everywhere and this will drive broader awareness and trial in multiple channels and then the launch of the single origins that you saw last week, we'll continue to strengthen this platform.
So we're all-in invested in the brands that we have. Not to say that we don't always look for opportunity externally from an M&A perspective, but right now, we're focused on the brands we have and driving that growth.
John Baumgartner -- Wells Fargo Securities, LLC -- Analyst
Okay. Thanks, Joe.
Operator
Our next question comes from Robert Moskow of Credit Suisse. Please state your question.
Robert Moskow -- Credit Suisse -- Analyst
Hi, thanks. I have a few questions. I'm going to try to ask the inventory question a little more directly. Walmart is 30% of your sales and they said publicly that they increased inventory in their January quarter relates to SNAP program. It just looks like there's just such a high correlation between your shipments above Nielsen measured consumption, especially in coffee and in consumer in relation to that statement.
And we've already touched on a bunch of ways. So maybe I don't know if there's anything more to add. But I guess I want to ask, have you done the math to try to compare and contrast the reported data compared to your ships?
I guess the second question is, the special projects in the quarter, it's $18 million, you're pulling it out, that's a pretty big number and I wanted to know what is special about these projects and why wouldn't we consider every year that there would be something that would require that kind of spending. Thank you.
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Yeah, Rob, I'll start. This is Joe. From a coffee perspective, again, our teams are obviously watching inventories constantly, especially at Walmart honestly our -- the coffee business has done well all year. So we have not seen anything out of the ordinary or dramatic that we would have called out to say that that's different. We're coming off one of the key promoted time periods of the year.
The third quarter with November, December into January being a highly promoted, high consumption time period. So again, from our perspective, we don't see anything significantly out of the ordinary.
David J. Lemmon -- President, Pet Food and Pet Snacks
Yeah, Rob. This isn't before Mark answers your next, I would just add that you're right. Our largest customers, quarters line up with ours and so it is possible that we do see some impact to our sales based on how they treat their inventory, but this quarter was not that way.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Rob, it's Mark Belgya then. So I think you're speaking to the $18 million other project costs in the P&L reconciliation. So as we defined in our non-GAAP, that is what we would call RMI. So it would be restructuring merger integration costs. So first of all, I'd say that we're consistent in our definition. We spent a fair amount of time making sure that it qualifies for our definition of special project costs and specific to this year, that's predominantly integration of Ainsworth business and then the geography decisions that we made earlier in the year and the cost associated with that.
So we feel that we're consistent. Obviously that number ebbs and flows a little bit, if we have integration or some sort of restructuring program in place. Our restructuring program that fall into this definition are all Board approved. So there are thresholds that are considered as a result of that. So we feel that the consistency of our definition and sort of the process we go through to make sure they qualify, we feel comfortable about putting on their and calling it out, obviously in the reconciliation between non-GAAP and GAAP numbers.
Robert Moskow -- Credit Suisse -- Analyst
Thanks for that Mark. I didn't realize that was restructuring. Last thing, the 3% to 4% EPS growth for fiscal '20, how much better would that have been if you didn't have the headwind from this divestiture. There's this $0.25 that you've called out, but there's kind of some puts and takes. Have you kind of tease that out for people because you have a long-term target of 8%. Is the answer somewhere in the middle that it would have been a core of around six or so.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Yeah, that's about right. I mean a couple of percentage points around that, so yeah your 5% to 6% could be right, Rob.
Rob Dickerson -- Deutsche Bank -- Analyst
Great. All right, thank you.
Operator
Our next question comes from Pamela Kaufman of Morgan Stanley. Please state your questions.
Rose -- Morgan Stanley -- Analyst
Good morning. This is Rose on for Pam. We just had a quick question on coffee. So if you think about the competitive dynamics that you're seeing, we've seen some headlines that a key competitor brand could be up for sale. So I'd be curious to know if you anticipate any impact from that development.
And then secondarily, within your premium segment, can you give us a sense for the competitive interaction between your 1850 and Dunkin' brands?
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Yeah, again is Joe. Hi. We talked about it before, but we feel really good. There are very limited interaction between 1850 and Dunkin'. Dunkin' has a real core consumer. Obviously Dunkin' corporate the shop. We continue to support that same positioning at retail and 1850 position is very different from the look and feel and even in the consumer that we target and we talk to. I spoke earlier about that higher index on the older millennials and the Gen X on 1850.
So a little more premium, a little more kind of what we would call (inaudible). So, no real concern there. I think we're all hearing the same things you guys are hearing from a competitive standpoint. At this point, it would be too early to speculate on what the potential implication could be of a major brand changing hands in the category. Obviously, it's happened before and we continue to stay focused on the things we need to do in our portfolio. And we'll be prepared for whatever happens.
Rose -- Morgan Stanley -- Analyst
Great. And if I could just follow up on 1850. Who are the customers you're seeing coming in? You said you're over-indexing to millennials and Gen X. Are you seeing new customers come into the category? Are you seeing kind of up-trade among your other brands?
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Yeah, mostly we are seeing 1850 really incremental to the category through expanding category consumption. So more consumption within the coffee portfolio, both for the category and our portfolio.
Rose -- Morgan Stanley -- Analyst
Great, thank you.
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Thank you.
Operator
Our next question comes from Rebecca Scheuneman of Morningstar. Please take your question.
Rebecca Scheuneman -- Morningstar -- Analyst
Good morning. So it's great to see the organic revenue growth in the quarter. And I was just wondering if you can tell me which brands were the primary drivers of that? And if those brands' strength was driven by innovation or wasn't more promotional, just kind of the key customer mix.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Hey, Rebecca. This is Mark Belgya. So as we said that in coffee it would have been Dunkin', it would have been 1850, Jif with Power-Ups, Uncrustables and then in Dave obviously Rachael Ray and just the addition there, but then Meow Mix and Kibbles 'n Bits were the five or six or seven key brands, all with significant increases year-over-year.
Rebecca Scheuneman -- Morningstar -- Analyst
Okay. And so I can probably assume like Meow Mix and Kibbles 'n Bits was more maybe promotional whereas from some of the other ones were maybe more innovation and maybe not sustainable therefore.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
I wouldn't say -- I wouldn't necessarily quote promotional, I think and Dave, you maybe want to elaborate, but certainly Meow Mix, we've been actively working that brand.
David J. Lemmon -- President, Pet Food and Pet Snacks
Yeah, quite honestly, when we launched a new advertising campaign and we saw dramatic lifts across Meow Mix during that time. So, we attribute the success to both tender centers, which is a new launch for the brand and from marketing support.
Mark T. Smucker -- President and Chief Executive Officer
Has more consumer support than any promotional support.
Rebecca Scheuneman -- Morningstar -- Analyst
Okay. Wonderful. Thank you so much.
Mark T. Smucker -- President and Chief Executive Officer
Thank you.
Operator
Our next question comes from Laurent Grandet of Guggenheim. Please state your question.
Laurent Grandet -- Guggenheim Securities, LLC -- Analyst
Yes, good morning and thanks for the opportunity. I'd like to drill a bit more into the Q4. As I mean, something I'd like you to really understand is the bridge between year-to-date results and full-year guidance, especially on the bottom line. As you're exiting 3Q in Europe in earnings an EPS and you kept full-year guidance the same. I understand there's $0.03 to $0.04 in term of marketing shift between 3Q and 4Q. But still, I mean there is a gap here. So is it coming from all the marketing spend, you would have to support the different launches you presented to us during CAGNY or is there anything else?
Unidentified Speaker --
Hey, Laurent, this is Mark Belgya. Thanks for the question. Let me just circle back to what I said earlier and try to quantify a little bit. So if you look at what the Street is thinking for Q4, the four things that I would suggest are new news or things that you should consider. One as you said is the marketing. The second is the impact of the price decline on Jif because it's effective next month. There is a higher effective tax rate than what we had submitted last quarter for both Q3 and Q4. And then lastly is just around the Uncrustables and Longmont facility. So, without being specific, I would say all four of those are sort of evenly spread in terms of the impact for Q4 and we suggested you sort of put that into your thinking to maybe to adjust and (inaudible) what they're thinking currently.
Laurent Grandet -- Guggenheim Securities, LLC -- Analyst
Thank you. That's all from me. Thank you.
Mark R. Belgya -- Vice Chair and Chief Financial Officer
You're welcome.
Mark T. Smucker -- President and Chief Executive Officer
Thank you.
Operator
Our next question comes from David Driscoll of Citi. Please state your question.
David Driscoll -- Citigroup -- Analyst
Great, thank you for taking the follow-up. This is for Dave on pet snack and the innovation. So I do appreciate the reiteration of the $100 million expectation for the innovation, but Dave, I wanted to clear up, did you say that the pet snack launch is on time or were you trying to suggest that it's going to be pushed out a little bit. I think you specifically said the sales would show up in fiscal '20, but I felt that shipping was all supposed to happen in the fourth quarter. Am I getting that wrong?
And then I just wanted to also ask about the -- just the numbers of products that you're launching. A little bit on the philosophy of why so many products at once. I mean on Milk-Bone, I believe you've got the novel product and you've got the wonder product and then you're also launching on True Treats and you've got just a lot happening right there. And I'm just wondering why you may be spread it out a little bit over the coming six months or so. Just to keep having a flow of innovation in the pet snacks business.
David J. Lemmon -- President, Pet Food and Pet Snacks
I'll answer your second question first David. This is Dave Lemmon. The answer to your question is, we have a huge amount of innovation coming. We're supporting every segment of the business. So through the value chain, into mainstream and it extends beyond premium and super premium. We are supporting all brands. The one key thing I would say is that Nutrish is getting a ton of support and is kind of weighing -- they are tipping the scale from that perspective. So we're giving a lot more innovation support to Nutrish moving forward in wet cat, wet dog and treats. So it's receiving support across the brand in every segment that we operate and we would expect it to deliver significant growth next year.
As to the timing question just to clarify, retailers have moved their mindset. So they explicitly would happen in February, they moved them out to later in March. So we would expect pipeline sales to pretty much occur in the fourth quarter, but, and we'll be lapping that, but we would expect a $100 million incremental on a full-year run rate.
Mark T. Smucker -- President and Chief Executive Officer
David, it's Mark Smucker. Just one way to think about pet is it to, if you think about it's a very, it's a more complex category, if you will and some of the others that we're in. And our like our Consumer Foods business, because we're not in baking anymore, it's not quite as complex, coffee is coffee and pet is just across there's multiple segments. And so I would say it in two ways. One, we have to innovate in order to -- and new news is required to compete in pet, number one and number two, pet does receive probably on in aggregate a slightly larger as a percentage of net sales, marketing, in order to support that type of activity.
When you think about Wonder Bones, and Gnaw Bones, I would think about those as more or less a single platform long lasting chews. So just to help put it in a little higher level and put it into some context.
David Driscoll -- Citigroup -- Analyst
That's very helpful. Thank you guys.
Mark T. Smucker -- President and Chief Executive Officer
Thanks.
Tina Floyd -- Senior Vice President and General Manager, Consumer Foods
Thank you.
Operator
I will now turn the conference call back to management to conclude.
Mark T. Smucker -- President and Chief Executive Officer
Well, first of all, I wanted to thank all of you for listening in today. Obviously, we had a good quarter and we're proud of that. Just like to remind everyone that really it is about our strategy, we are in it, obviously, as we said, at CAGNY acquisitions will continue to play a role, but given where we are in executing our strategy, our leverage position, it is imperative for us to innovate and so our long-term strategy is to grow organic top and bottom lines and ultimately, of course, increase shareholder value. So again, thank you for your time. Thank you for listening and thank you to our employees for delivering.
Operator
Ladies and gentlemen, this concludes our conference call for today. Thank you all for participating and have a nice day. All parties may now disconnect.
Duration: 72 minutes
Call participants:
Aaron Broholm -- Vice President, Investor Relations
Mark T. Smucker -- President and Chief Executive Officer
Mark R. Belgya -- Vice Chair and Chief Financial Officer
Andrew Lazar -- Barclays Capital -- Analyst
David J. Lemmon -- President, Pet Food and Pet Snacks
David Driscoll -- Citigroup -- Analyst
Ken Goldman -- J.P. Morgan -- Analyst
Christopher Growe -- Stifel Nicolaus -- Analyst
Tina Floyd -- Senior Vice President and General Manager, Consumer Foods
Joseph Stanziano -- Senior Vice President and General Manager, Coffee
Bryan Spillane -- Bank of America Merrill Lynch -- Analyst
Jason English -- Goldman Sachs -- Analyst
Rob Dickerson -- Deutsche Bank -- Analyst
Akshay Jagdale -- Jefferies -- Analyst
John Baumgartner -- Wells Fargo Securities, LLC -- Analyst
Robert Moskow -- Credit Suisse -- Analyst
Rose -- Morgan Stanley -- Analyst
Rebecca Scheuneman -- Morningstar -- Analyst
Laurent Grandet -- Guggenheim Securities, LLC -- Analyst
Unidentified Speaker --
Transcript powered by AlphaStreet
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
