JM Smucker explores sale of Voortman Bakery

USA -JM Smucker Company has reportedly been considering the sale of Voortman Bakery, a brand it acquired less than a year ago as part of its US$5.6 billion purchase of Hostess Brands.

This move comes as the company assesses its portfolio and seeks to gauge market interest in the cookie and wafer brand, which was previously acquired for approximately US$320 million in 2019.

According to sources cited by Reuters, Smucker is collaborating with Goldman Sachs to explore potential buyers for Voortman Bakery.

The decision to evaluate the sale reflects a strategic shift within the company as it aims to optimize its operations and focus on its core brands. Just Food reached out to JM Smucker for comments, but the company has yet to respond.

Voortman Bakery has been integrated into Smucker’s sweet-baked snacks division, which also includes popular brands like Donettes and Twinkies.

The sweet-baked snacks unit reported net sales of US$637.2 million for the year ending in April, contributing to the company’s overall net sales of US$8.18 billion.

The division’s segment profit stood at US$138.2 million, while the total company-wide segment profit was US$1.94 billion.

TD Cowen analyst Robert Moskow noted that Voortman product sales have remained stable, generating US$190 million at retail over the past year.

In contrast, sales from the remaining Hostess brands have seen a decline of 2%, including mid-single-digit drops in the last 12 weeks.

Moskow emphasized that selling Voortman Bakery could slightly dilute the growth potential for Hostess assets in the upcoming fiscal year.

He remarked, “Voortman was margin accretive to the Hostess business as well,” indicating its positive impact on profitability.

Market analysts have expressed concerns regarding JM Smucker’s acquisition of Hostess Brands. Many investors believe the company overpaid and may struggle to achieve the ambitious 4% long-term organic growth target set during the acquisition.

Moskow stated, “Most investors believe that Smucker overpaid for Hostess and will fail to achieve the lofty 4% long-term organic growth target they assumed in their acquisition model.”

He highlighted that the guidance for fiscal year 2025 anticipates a return to 3-5% growth for Hostess in the latter half of the year.

The potential sale of Voortman Bakery raises questions about Smucker’s future strategy and its ability to innovate within the competitive snack food market.

Analysts suggest that success will hinge on the company’s capacity to introduce compelling new products while maintaining a balance between trade promotions and profit margins to drive volume.

As JM Smucker navigates this pivotal moment, the outcome of its evaluation of Voortman Bakery could significantly influence its growth trajectory in the snack food sector.

The decision to explore a sale reflects broader trends in the industry, where companies continuously reassess their portfolios to adapt to changing consumer preferences and market dynamics.

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