How Smucker works toward sustainable coffee and brews new innovation

Coffee is one of the most popular beverages among U.S. adult consumers, and the J.M. Smucker Company has found it to be a source of both success and innovation.

The company — which owns Folgers, Café Bustelo and the license to produce CPG Dunkin’ coffee — controls more than a quarter of the U.S. at-home coffee market. And as coffee is an area the company believes will continue to grow, Smucker also deals with some of its challenges, including sustainability and new ways to innovate a beverage that has been a staple for generations.

Joe Stanziano, senior vice president and general manager of coffee at Smucker, sat down with Food Dive at the company’s headquarters to talk about the coffee business, its challenges and its future. This is the second part of the conversation. The first is available here.

This interview has been edited for brevity and clarity.

FOOD DIVE: What are you doing about the sustainability of the coffee business?

STANZIANO: Coffee has a unique supply chain, and as the largest coffee roaster and company in North America in coffee, we are very committed to that. We source coffee from [14] countries and the coffee is grown in over [50] countries globally. 

The other big thing that I don’t think a lot of people think about [is] it is not a crop that is developed around large agricultural farms. It tends to be small farms, family farms around the globe, that really are the key drivers of the coffee growers. It’s a challenge. 

We do a lot of work in-country to ensure that we’re supporting those farmers from an environmental standpoint, from an economic standpoint, and from a social sustainability [standpoint]. It’s to ensure that we do have coffee for the growth of the future, but it’s also to ensure that it’s a viable option for the farmer.

We partner with a lot of our peers and NGOs that are helping to teach farmers better practices to increase yield, increase their business acumen, so that it is sustainable for them — and hopefully, that the next generation will see that as an opportunity to stay and continue to grow. 

Smucker is a huge force in coffee, with a little more than a quarter of the U.S. at-home coffee market. What are your future growth opportunities? 

STANZIANO: We’ve got to continue to grow in multiple ways. We’ve got to grow share for our brands. We’ve got to continue to help support growth in consumption. Innovation is really important. 

Many consumers have their base coffee go-to, but it’s a very experimental category as well, right? People love to try different things. Seasonal flavors are really big. We all know when the fall hits, pumpkin spice gets into the rotation. 

It’s bringing innovation. It’s bringing new forms to really address what’s the consumer’s concern. What’s the consumer opportunity to solve? Is it convenience? Is it lack of knowledge of roasting? Is it different roast profiles? There has been a significant shift over the last five to 10 years of consumer preference of a darker roast, because they want something bolder, so we have those opportunities. 

How has the pandemic changed the at-home coffee business?

STANZIANO: The pandemic was terrible for a lot of people. But for an at-home coffee company like us, it was very good because people were at home. They weren’t going to work. They weren’t traveling. Many restaurants and cafes were shut down.

It led to a lot of experimentation. I think it led to some of the acceleration of some of these trends. Consumers had to learn more, become their at-home barista. Consumers were actually doing more experimenting [with] brewing. Different forms, pour-overs, trying different versions of machines. 

I think going forward, we’ll continue to probably be in some hybrid work model, so we know consumers are going to be starting their day at home, and they have more options of how they brew their first cup of the day.

At CAGNY, CEO Mark Smucker talked about the category and said there would be some strong considerations to use M&A to move coffee forward. What kind of acquisitions are you looking at?

STANZIANO: I think our M&A strategy hasn’t really changed much. It’s always been the same. We’re always on the lookout. We want to be very choiceful because we love our portfolio and each brand plays very specifically in the space and has a really nice position. 

If we think about a brand, where’s it going to play, not only in the category, but where’s it going to play in our portfolio, and what are we going to do to drive growth that won’t impact the opportunity for our other brands? 

We talked a lot about capabilities. Is there an acquisition that could increase our capability in a certain way — whether that be form, go-to-market, package — that could give us not only an immediate boost with that acquisition, but the ability then to use that across our whole portfolio. 

Where do you see Smucker’s coffee going in the next 12 to 18 months? 

STANZIANO: We would continue to support our consumer at-shelf. This year, we know, has been challenging for consumers with inflation across all categories, both in food and gas and other things. We have continued to try to invest where we can to ensure that our consumer has the ability to continue to buy our product, and have an attractive, competitive price point.

You just mentioned prices. Coffee is a commodity, so what do you do to keep prices down for consumers?

STANZIANO: Our sourcing I would put as second to none. It’s world class. We have our commodity sourcing team together here in Orville, but we also have offices in Brazil, in Vietnam. We have a great support of resources globally to really understand what’s happening in origin, and to really, quite frankly, use our knowledge and the hedging vehicles to ensure that we are buying the right quality coffee at the right price.

The other thing we continue to do really well in our organization, especially through supply chain and operations, is drive cost down. It’s in our mentality day-to-day, year-to-year. We are always looking for: How do we reduce costs? How do we improve efficiencies? How do we drive costs down — which gives us the ability to reinvest back into our brand building and our pricing. 

We are always, I believe, in a very competitive position. But it is difficult when you have one ingredient in your package, and that’s it. So we spent a lot of time and effort very focused on it.