J.M. Smucker recently announced that they’ve spent $360 million to acquire Rowland Coffee Roasters. The privately held company, based in Miami, produces the Cafe Bustelo and Cafe Pilon brands, as well as ready to drink coffee beverages. Popular with Hispanic shoppers, the company sales were approximately $110 million last year.
Smucker’s already has a significant position in the coffee industry, with both the Folger’s and Dunkin Donuts brand. This existing infrastructure can explain part of the decision to expand; customer demand for coffee has proven remarkably strong even through tough economic times. Making the case for expansion isn’t difficult. The interesting part of the question lies in deciding which way to grow.
Brand Modeling as a Decision Making Tool
The greatest challenge business leaders face is uncertainty. Smucker’s obviously has a desire for increased market share and greater profitability. The organization has more than 25 profitable brands in several different sectors. In addition to their coffee holdings, Smucker’s owns Pillsbury, Crisco, and a trio of jam and jelly companies. Growth opportunities exist in every sphere: why choose coffee?
The Brand Modeling approach to that question would begin with looking at Smucker’s existing customer base, paying particular attention to those customers who buy Smucker’s family products in quantity, perhaps exclusively in category, and who have a demonstrated strong emotional connection to the brand. These customers are known as Brand Lovers. They’re the most profitable segment of any organization’s market. More importantly, these Brand Lovers play a pivotal role in identifying opportunities into the marketplace.
If you can identify, with a high degree of specificity, what your best customers value most and consistently expect from your brand, you can then consistently choose actions and campaigns that will delight and attract those customers. If you’re going to acquire another company, you should acquire a company that does things in a way that will appeal to your Brand Lovers. Smucker’s loyal customers are drawn to the brand’s messaging of tradition, quality, and a nostalgic-tinged insistence that good things take time.
Chances are that these customers are going to drink coffee. Most people do. Smucker’s might already have those customer’s business. It may be that the best Smucker’s customer is already committed to the Folger’s or Dunkin Donuts brands. But it may also be true that those coffee needs weren’t being met, or that they could be met better. Serving your best customer’s needs better than anyone else does is the route to profitability.
What Can Rowland Coffee Do for Smucker’s Brand Lovers?
Enter Rowlands Coffee Roasters. The Cafe Bustelo and Cafe Pilon brands have strong following in Florida and the Northeast among the Hispanic community. At first glance, Smucker’s acquisition seems like nothing more than participation in the burgeoning national trend to court the Hispanic consumer.
However, when you delve into Rowland’s history and discover that it, like Smucker’s flagship brand, is that quintessential American dream tale of a small-town entrepreneur who built a brand from nothing but a dream into a proud family business, the fit seems more natural. The two companies share the same story; they have embraced the same myth as core to their identity. When we look at Smucker’s and we look at Rowland Coffee Roasters, we see key values in alignment. Tradition, pride in one’s heritage, the value of having a place in a community: all of these will resonate with Smucker’s customers and motivate them to buy.
Meanwhile, Smucker’s has an immediate opportunity to prove themselves to the Hispanic community. If they can continue to deliver on the Rowland Coffee Roaster’s established brand promise while leveraging the greater manufacturing and marketing resources they have at their disposal, the chances are very good indeed that the result will do more than ‘perk up’ Smucker’s bottom line.