J.M. Smucker (NYSE:SJM) announced this week that effective May 1, Mark Smucker will replace his uncle Richard Smucker as president and CEO of the packaged food and coffee company best known for its Smucker's jam, Jif peanut butter, and Folgers coffee.
Mark Smucker, age 46, is currently the president of Smucker's consumer foods business and will be the fifth generation family member to run the company. He has held senior positions in nearly all major businesses within the company over the past 18 years.
Outgoing CEO Richard Smucker will become executive chairman of the board, succeeding his brother Timothy (Mark's father) in this role, while Timothy will transition to the role of chairman emeritus and remain on the board. Richard has been CEO since 2011 and served as co-CEO with Timothy beginning in 2001.
Does it matter?
It remains to be seen how much the change at the top will matter to investors. It will probably have little impact in the near future as Mark Smucker settles into the role. The company is also busy integrating Big Heart Pet Brands -- its largest ever acquisition -- so major changes are unlikely for the time being.
However, as Mark Smucker grows into his position, it's possible he could take the consumer foods segment -- its flagship business that accounted for 29% of total revenue last quarter -- in a healthier direction to reverse the segment's declining revenue and profit margins. Smucker must restore some of the trust consumers have lost in the brand due to its less-than-healthy offerings.
Excluding one-time items, consumer foods profit fell 14% year-over-year during the fourth quarter, and segment profit margin was about 18%. This business has been struggling for some time as the more profitable coffee segment (30.6% margin) made up the earnings shortfall. Even the retail pet food business managed a segment profit margin of 17%, despite the fact that Smucker is still incorporating Big Heart into its business.
Many of the traditional packaged-food makers have been struggling, at least in part, due to changing consumer preferences. Snack food giant Mondelez, for instance, experienced a 3.1% decrease in volume in its most recent quarter.
Richard Smucker is leaving on a high note thanks to the Big Heart acquisition, but the consumer foods segment will be a challenge for his nephew.