The J. M. Smucker Company
) 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 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
) has increased its fruit and vegetarian offerings, traditional
) 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
Smucker holds a Zacks Rank #3 (Hold).
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