Back to top

Analyst Blog

Food manufacturer The J. M. Smucker Company (SJM - Analyst Report) recently announced the completion of its acquisition of Calif-based Enray Inc. for an undisclosed amount. Enray is a privately-held company that manufactures and sells organic, gluten-free ancient grain products. The acquisition also includes a leased manufacturing facility in Livermore, Calif.

The acquisition is expected to benefit Smucker as it will strengthen its position in the natural and organic beverages category with Enray’s truRoots brand. The deal is a strategic fit for Smucker as Enray's gluten-free product line includes pastas, sprouted and non-sprouted grains and cookies, which will perfectly complement Smucker’s products like fruit spreads, retail packaged coffee, peanut butter, shortening and oils, ice cream toppings and sweetened condensed milk.

Demand for healthy, nutritious and natural foods has grown in recent years as people are more concerned about obesity and other health problems. We believe that this might as well have led to the acquisition.

The demand for specialty and organic food has increased despite the pullback in consumer spending. This is evident from the fact that many grocers are beefing up their organic offerings in order to tap the growing demand. While the retail giant Wal-Mart Stores Inc (WMT - Analyst Report) has increased its fruit and vegetarian offerings, traditional grocers like Kroger Co. (KR - Analyst Report) and Safeway Inc. (SWY - Analyst Report) have boosted their specialty food products with more vegan and gluten-free products. Last month, Kroger agreed to buy grocer Harris Teeter Supermarkets Inc (HTSI) to expand in the health food business.

We believe that the changing consumer preference toward health and wellness and “good-for-you” products is here to stay. Consumers have now become conscious regarding obesity and other weight related problems.

The American Heart Association estimates that currently about one-third of U.S. adults are obese. If the current obesity growth trend continues, total healthcare costs attributable to obesity could account for as high as 16% to 18% of US health expenditure. As a result, Americans are gradually spending more on high-priced organic and specialty food products despite overall decline in consumer spending.

Smucker holds a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%