Is J.M. Smucker management overestimating its brand power?

J.M. Smucker Co. (SJM) wrapped up the 2022 fiscal year with good results, but analysts are skeptical that its COVID-19 era success is anything other than being at the right place at the right time. For the fourth quarter, the maker of Jif, Folgers and Uncrustables saw net sales increase 6 percent compared to the same time last year. Management credited a 15% price increase for the sales growth. Surprisingly, they think there’s still room for more price increases. “We don’t believe there’s a (pricing) window,” CEO Mark Smucker told investors. “We’re obviously cognizant of (pricing) pressure on consumers, but as you know, we have a responsibility to our shareholders to protect our dollar profit.”

Does J.M. Smucker Co. have the power to command additional price increases despite consumers showing more appetite for private label?

Analysts are skeptical. According to Morningstar, at 6.9% of sales, Smucker’s brand investments far exceed its peer average of 5.4%. Management is paying more for marketing, but its brands are still only treading water. Part of that is because of the categories that Smucker sells. It primarily competes in peanut butter, fruit spreads, at-home coffee and pet food. Of those four, only pet food could be considered a growth market.