J.M. Smucker Co. SJM
Q3 2011 Earnings Call Transcript

Operator: Eric Katzman, Deutsche Bank.

Eric Katzman - Deutsche Bank: I guess my first question has to do with the lack of elasticity that you saw across the portfolio. As you've kind of increased prices as the fiscal years progressed, maybe you could kind of talk about kind of the retailer and consumer reaction you've seen and how much promotion was kind of we didn't see in the top line and did the effective use of promotion help you in terms of generating what seems like a low level of elasticity; and then I'll have a follow-up?

Richard K. Smucker - Executive Chairman and Co-CEO: Why don't we take it by each of our businesses, it probably be the best way to describe it.

Vincent C. Byrd - President, U.S. Retail - Coffee: As you know in most of you've reported given where coffee prices have been, it would indicate that the effect of elasticity would be much greater than what we saw during the quarter and year-to-date, and as Mark said I think our volume was down 2% in the quarter in coffee. I would just like to make the point though that's on a difficult comp of last year, we were at 4%. I guess, we are very, very pleased. The bottom line is we're very, very pleased, given the volume how it reacted in the third quarter and particularly given some of the competitive activity in a major retailer. So, net-net, we're very pleased, but I think it's also fair to say we're in unchartered territory, given coffees sitting at 14-year highs. I will say that we are seeing some volume being shifted to non-measured channels, and again as consumer shop different outlets, we were seeing the benefit of that.

Steven Oakland - President, U.S. Retail - Smucker's Jif and Hungry Jack: If we look at the consumer business, I think we've talked each quarter, we reduced our peanut butter list price to reflect the lower cost peanuts that we've experienced this year and we were the only major brand to do that. So, we saw our branded everyday on some key sizes on 28-ounce and 40-ounce on those value sizes come down below some key deciles. So, that allowed us to use marketing mix and use promotional spending that wasn't as deep as the stuff we saw competitively. We saw (10 for 10s) and all of this other stuff going on between private label and branded, but we were able to get the everyday price right, put incremental promotion where we needed to but stack the marketing mix against that. We're really pleased with the response.

Paul Smucker Wagstaff - President, U.S. Retail - Oils and Baking: On the Oils and Baking side, specifically speaking to Crisco, we did take a price decline in the second quarter and that was really meant to close the price gaps on shelf and I think we were able to achieve that. You could see we were up 27%. We did have some additional spending, so we did buy some of that share back, but we felt that we did a low point in how much share we're willing to see erode and we felt actually pretty good with the results of that volume gain in the third quarter.

Mark T. Smucker - President - Special Markets: I would say in Canada, we have a pretty broad portfolio products there and generally speaking, our promotions both in the Fall Bake and the Baking area as well as across some other categories like coffee have been very effective. We have seen some easing of competitive activity and that obviously helps us as well.