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The Secret Sauce Behind Smucker's Sustainability

Why has this company, which for most of its life has focused on the prosaic business of making jellies and jams, lasted for 113 years? Read More

(Updated on July 24, 2024)

In 1897, a farmer in Orrville, Ohio, named Jerome Monroe Smucker began selling stoneware crocks of apple butter from the back of a horse-drawn wagon. He signed the lid of each one, to vouch for its quality.

The J.M. Smucker Co. still sells apple butter with the family name on the label. It also sells Smucker jams and jellies, Jif peanut butter, Folger’s coffee, Crisco shortening, Pillsbury cake mixes, Eagle condensed milk, Hungry Jack pancakes and R.W. Knudsen juices — 2,100 products in all, which brought in $4.6 billion last year.

This is noteworthy but hardly unprecedented. Some of America’s biggest companies took root in the 19th century as family businesses selling a single product — DuPont with gunpowder in 1802, Procter & Gamble with candles in 1837, General Electric with the electric lamp in 1892.

What makes Smucker unique is that, more than a century later, it remains a family-run business. Still headquartered in rural Orrville (population: 8367), the company has had five chief executives, all named Smucker — J.M. (1897-1947), his son Willard (1948-1960), his son Paul (1961-1987) and, since then, Paul’s sons Timothy and Richard Smucker, who currently share the job of CEO.

Fifth-generation cousins Mark Smucker and Paul Smucker Wagstaff are being groomed to succeed them. “We would like that, but it’s not a fait accompli,” Richard Smucker, the boys’ uncle and their boss, told me when I visited the Smucker Co. last month.

I’ve got a story about J.M. Smucker in the current (Aug. 16) issue of FORTUNE; it’s one of a series of profiles of FORTUNE 500 companies that I’m writing for the magazine. While working on the story, it struck me that the Smucker offers a interesting and little-known case study in sustainability: Why has this company, which for most of its life has focused on the prosaic business of making jellies and jams, lasted for 113 years?

And not just lasted, but thrived. As I wrote in the magazine:

Smucker’s sales have exploded from $632 million in fiscal year 2000 to $4.6 billion in 2010, during which time the company acquired such well-known brands as Jif, Crisco, and Folger’s. Profits, meanwhile, have grown more than 10-fold, from $36 million to $494 million. Shareholders have also fared well. Over the past 10 years the company has delivered a total return of 309%, compared with -15% for the S&P 500, notes Farha Aslam, an analyst with Stephens.

That is truly impressive. Farha Aslam, who follows the company closely, told me: “Tim and Richard are clearly focused on delivering shareholder value. They take pride in that.” The soft-spoken brothers, who are both Wharton grads, led a strategic makeover of the company in the 1990s and engineered a series of shrewd acquisitions in the last 10 years.

But I believe that the Smucker’s corporate culture, which has been shaped over the years by the family’s religious values, has been the key to its staying power. Tim and Richard see themselves as stewards of a family business whose reputation for integrity and decency is one of its most valuable assets. They want to give their employees opportunities to grow along with the business. They still work in the small town where they grew up. And their unusual partnership, as co-CEOS, sets an example for everyone in the company; people are urged to collaborate, and the leadership style is more about “we” than “me.”

If it sounds like I’ve drunk the Smucker’s Kool-Aid (actually, I prefer Santa Cruz Organic Lemonade, another J.M. Smucker brand), well, there’s evidence to support the notion that this is a special company. Smucker is a regular on FORTUNE’s Best Places to Work list and it was voted the No. 1 workplace in the U.S. back in 2001.

As Al Yeagley, a vice president who has been with Smucker for 36 years, told me: “The real secret is the family. They treat people the way you want to be treated. It’s the old golden rule.”

Smucker is in many ways an old-fashioned company, so it has been slow to pay attention to environmental sustainability. The company has taken steps to reduce its waste and use renewable energy, and Tim Smucker told me that the company plans to take its environmental initiatives up a notch in the next few years.

A couple of other things I found interesting about J.M. Smucker: While the family once held stock with super-voting rights, giving them absolute control, they now own fewer than 10 percent of the shares. Instead of reserving a special class of stock for the family, all shareholders (including the family, of course) who have owned shares for at least four years get extra votes. “We like that concept because it rewards long-term shareholders,” said Richard.

Also, all employees are given a memo written by Paul Smucker, written in the early 1980s and called “Our Commitment to Each Other.” It neatly captures the “Midwestern nice” feel of the company so I will share it here. (My favorite line is the one about how humor is a good thing but “not at the expense of others”!) :

As Smucker’s experiences growth in the 80?s, we need to insure that we retain one of Smucker’s most cherished goals — the mutual respect of our fellow employees and an atmosphere that makes people proud to work here. This same commitment can be enlarged to include our customers, suppliers, and shareholders.

Here are a few basic thoughts, when put into our everyday lives, that can help:

Thank you for a job well done — This small recognition shows that we notice and appreciate the efforts of our fellow employees.

Listening with your full attention — By giving our undivided attention, we are showing that there is nothing more important at that moment than what is being said.

Looking for the good in others — By seeing the good in others, we are demonstrating our respect and confidence in their intentions to do what is right, and we are developing an atmosphere where we can grow and learn.

Sense of humor — Our work efforts are important; that is how we set the example and take the lead. Our sense of humor is also important, for that is how we maintain our perspective to our work. Humor, not at the expense of others, but as a brief relief from difficult tasks, can make our working atmosphere more pleasant and enjoyable.

By keeping these few thoughts in our minds every day, we can build a bridge of understanding that will nourish the atmosphere in which we work and our mutual respect for each other. I ask for your commitment to these thoughts; I ask for your commitment to each other.

Good advice, I think, for managers everywhere. You can read the rest of my FORTUNE story here.

GreenBiz.com Senior Writer Marc Gunther is a longtime journalist and speaker whose focus is business and sustainability. Marc maintains a blog at MarcGunther.com. You can follow him on Twitter @marcGunther.

Photo CC-licensed by ginnerobot.

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