They are still known as "the boys" around J.M. Smucker Co., the 112-year-old maker of fruit jams and peanut butter.
Brothers Tim and Richard Smucker grew up around the family business, listening to their dad talk shop at the breakfast table, and as teenagers loading trucks and mopping jelly off factory floors. As they grew older, taking jobs in the finance and marketing departments, they eventually would form an unusual partnership that has elevated the company from small-town beginnings in Orrville, Ohio, to power player in the food world.
Several large deals were done on the brothers' watch in the past six years. But the $3.7 billion purchase of the Folgers coffee brand from Buckeye State neighbor Procter & Gamble stands out from the rest.
It couldn't have been timed better. Closed a year ago, the deal put the first billion-dollar franchise into Smucker's pantry, adding coffee to a lineup that was stocked with names like Hungry Jack pancake mixes, Pillsbury cake icing, and Jif peanut butter.
Mergers often fail to reward investors as promised. Under the brothers, however, J.M. Smucker /quotes/comstock/13*!sjm/quotes/nls/sjm (SJM 58.98, -0.52, -0.87%) delivered this year with Folgers, investors and analysts say. Folgers sales have grown by a percentage in the "high single digits" and topped most expectations. Growth kicked in last spring, when Folgers sales surged after a flat, and at times declining, year. In the past two quarters, Folgers volumes have risen by 9% and 5%, respectively.
"We have to give it high marks," Chuck Cerankosky, a NorthCoast Research analyst, said of the performance.
By turning their biggest acquisition yet into a success, delivering to shareholders sweet gains in a sour climate, and stressing ethics in their oft-praised workplace, the Smucker brothers are the co-winners of MarketWatch's CEO of the Year for 2009.
They've been spooning out good results all year long. And Smucker gave investors more to nibble on recently when it lifted the long-term operating-margin forecast for the Folgers business by two percentage points to 30%. For the country's legions of cash-strapped consumers, Smucker cut the price of the brand's familiar red canisters of coffee.
For brand-name-packaged-food makers during the recession, volume growth has been hard to come by, as retailers have cut inventories and Americans have pulled the purse strings ever tighter.
Having Folgers in house has only strengthened Smucker's ability to respond, as cross promotions have spurred demand for Hungry Jack pancake mixes and syrups, the company's namesake jams, Pillsbury bake mixes and Jif.
Not counting the Folgers side of the house, Smucker also achieved modest volume-growth pickups this year in the second and third quarters. Hungry Jack, Jif, Pillsbury, and Crisco have led the way. The struggle for growth at other food companies, including the likes of H.J. Heinz, Hormel, Sara Lee and Kraft, has been less successful.
With the boys presiding, Smucker sales have grown fivefold through acquisitions over the past six years, thrusting the Orrville food purveyor into the No. 1 market-share position in 10 different categories in the central aisles of America's grocery stores.
When it came to getting their hands on Folgers, the brothers had their work cut out for them in persuading P&G /quotes/comstock/13*!pg/quotes/nls/pg (PG 61.88, -0.59, -0.94%) to sell Smucker a business it had long coveted to complement its breakfast and dessert offerings.
P&G had publicly stated its intention to make Folgers a stand-alone outfit and was working with its bankers to achieve that goal. It took four months for the Smuckers to sell P&G on the argument that their proposition was a more compelling one. After that, they had to win back investors who'd punished Smucker in the weeks after the deal was unveiled.
Once the acquisition was completed, however, the brothers moved swiftly to cash in on the Folgers name.