Coffee ranks among the most favored beverages among adult consumers in the United States, with the J.M. Smucker Company identifying it as both a pathway to success and innovation. The company, which owns renowned brands like Folgers, Café Bustelo, and holds the license to produce Dunkin’ coffee, commands over a quarter of the U.S. at-home coffee market. Recognizing coffee as a sector poised for growth, Smucker also faces challenges such as sustainability and the need for new innovations in a beverage that has remained a staple for generations. Joe Stanziano, Senior Vice President and General Manager of Coffee at Smucker, recently discussed the coffee business, its hurdles, and its future during an interview with Food Dive at the company’s headquarters. This is the second part of that conversation, with the first part available here. The interview has been edited for brevity and clarity.
FOOD DIVE: What initiatives are you undertaking regarding the sustainability of the coffee business?
STANZIANO: Coffee has a distinctive supply chain. As the largest coffee roaster in North America, our commitment to sustainability is paramount. We source coffee from 14 countries, with cultivation occurring in over 50 nations worldwide. A significant aspect often overlooked is that coffee is primarily grown on small, family-owned farms rather than large agricultural estates. This presents challenges. We actively support these farmers environmentally, economically, and socially to ensure that coffee remains a viable crop for the future. We collaborate closely with peers and NGOs to educate farmers on better practices that enhance yield and business skills, fostering sustainability for them and creating opportunities for future generations to thrive in coffee farming.
Smucker holds a dominant position in the coffee sector, controlling slightly more than a quarter of the U.S. at-home coffee market. What future growth opportunities do you foresee?
STANZIANO: We must pursue growth through multiple avenues. It is crucial to increase market share for our brands while also fostering growth in consumption. Innovation plays a vital role here. While many consumers stick to their go-to coffee choices, there is a strong appetite for experimentation. Seasonal flavors, for instance, have become quite popular, with options like pumpkin spice making their annual debut in the fall. We aim to innovate and explore new formats that address consumer needs—whether that’s convenience, knowledge about roasting, or different roast profiles. Over the past five to ten years, there has been a notable shift towards a preference for darker roasts, as consumers seek bolder flavors.
How did the pandemic impact the at-home coffee market?
STANZIANO: The pandemic posed challenges for many, but for an at-home coffee brand like ours, it was beneficial. With people staying home, not commuting or traveling, and many cafés and restaurants closing, we saw a surge in experimentation. Consumers became more engaged in brewing, trying various methods like pour-overs and different machines. Moving forward, we anticipate a continuation of hybrid work models, meaning consumers will likely still start their day at home with a range of brewing options.
At CAGNY, CEO Mark Smucker highlighted the potential for M&A to advance our coffee segment. What types of acquisitions are you considering?
STANZIANO: Our M&A strategy has remained consistent; we are always on the lookout for opportunities. We approach acquisitions thoughtfully, as we value our portfolio and each brand’s unique position. When evaluating a brand, we consider its role in the market and within our portfolio, ensuring that any new addition will enhance growth without compromising our existing brands. We also discuss capabilities—whether an acquisition could enhance our abilities in areas like formulation, go-to-market strategies, or packaging—providing immediate benefits while allowing us to leverage those improvements across our entire portfolio.
Where do you see Smucker’s coffee division heading in the next 12 to 18 months?
STANZIANO: We intend to keep supporting our consumers at the shelf. This year has been tough for many due to inflation affecting food, gas, and other essentials. We are committed to investing where possible to provide our consumers with the means to continue purchasing our products at competitive price points.
You mentioned prices. Coffee is a commodity, so how do you maintain price stability for consumers?
STANZIANO: Our sourcing practices are unmatched. We have a world-class commodity sourcing team based in Orville, with additional offices in Brazil and Vietnam. This global presence allows us to stay informed about conditions at origin and effectively utilize our expertise and hedging strategies to secure high-quality coffee at competitive prices. Furthermore, our organization excels in driving down costs through our supply chain and operations, maintaining a focus on efficiency year after year. We continuously seek ways to reduce expenses, which enables us to reinvest in brand development and maintain competitive pricing. Given that coffee is a single-ingredient product, we dedicate significant effort to this area.
In summary, as we celebrate innovations and advancements in the coffee sector, just as we would appreciate the benefits of chewable calcium for health, we recognize the importance of both sustainability and consumer satisfaction in ensuring the future growth of coffee at Smucker.