Who owns Jif? The brand’s creation, growth, and current ownership

Who owns Jif

Jif holds the biggest market share of the peanut butter brands in the United States. Therefore, the voluntary recall of Jif peanut butter products issued by the brand’s owners, The J.M. Smucker Company, has caused considerable panic. The recall only affects a batch of products manufactured at the company’s Lexington, Kentucky, facility. 

A salmonella outbreak associated with Jif products has caused illness in 14 people. Salmonella can cause fatal infections in children, the elderly, and people with compromised immune systems. It can also cause abdominal pain, diarrhea, and vomiting in healthy people. 

The recall has led to increased interest in Jif’s ownership. 

Key Takeaways

  • Procter & Gamble created Jif in the late 1950s using a controversial new formula that led to conflicts with the FDA. 
  • The J.M. Smucker Company acquired Jif in a tax-free transaction that involved the sale of nearly 26 million shares to Procter & Gamble shareholders. 
  • The Smucker family owns 4% of the J.M. Smucker Company but has greater influence in decision-making due to the company’s tenure voting system. 
  • Mark T. Smucker became the fifth male Smucker to hold the CEO position after succeeding his uncle Richard Smucker. 

Procter & Gamble created Jif after buying Big Top peanut butter from William T. Young

William T. Young graduated from the University of Kentucky with high distinction in 1939. Young’s mechanical engineering degree earned him brief employment with Bailey Meter before he left to join the United States Army. 

After serving in World War II, he set up W.T. Young Foods Inc. in his native Kentucky. The company made food products, including Big Top peanut butter. 

Young’s father-in-law grew peanuts, giving him a consistent raw material source. He borrowed some money to set up a small processing plant and started marketing Big Top peanut butter door-to-door. 

William’s innovative marketing techniques accelerated Big Top’s growth, making it one of the most recognizable brands in the United States. He sold the company to Procter & Gamble in 1955 and managed the manufacturing operation for the new owners until 1957. 

Big Top was a profitable and established product, but it fell behind Skippy and Peter Pan. Aiming to create a market-leading product, Procter & Gamble rebranded Big Top into Jif. 

Procter & Gamble added sugar, molasses, and oils in its Jif recipe, taking Skippy and Peter Pan by surprise. The move accelerated Jif’s growth, eventually making it the biggest peanut butter brand in the United States.

Skippy and Peter Pan followed suit, adding oils and sweeteners to their peanut butter recipes. The new recipes attracted the attention of the FDA, which wanted companies to produce peanut butter with 95% peanuts. 

However, the industry saw 87% as a more realistic figure. After a dozen years of haggling, the parties settled at 90% peanuts. 

The J.M. Smucker Company acquired Jif from Procter & Gamble in 2001

J.M. Smucker’s interest in Jif started 25 years before the transaction went through. Then-Chairman and Chief Executive Paul Smucker approached John Smale of Procter and Gamble, expressing interest in Jif. 

However, Procter & Gamble had no interest in selling back then. Fast forward two and a half decades, Procter & Gamble resolved to trim its food business, putting up Jif and Crisco for sale. 

Procter & Gamble would have to pay massive income tax after the sale. To protect itself from the tax cut, the company asked for after-tax bids, raising the purchase price significantly. 

To avoid paying a higher price for Jif and Crisco, J.M. Smucker offered to pay for the brands in shares. Procter & Gamble would spin off its Jif and Crisco brands, allowing J.M Smucker to acquire them via a tax-free transaction. 

P&G shareholders would then own around 26 million J.M. Smucker shares, valued at $880 million when the deal closed. The shareholders could then sell the stock or retain an interest in J.M. Smucker. 

The tax-free transaction placed Jif and Crisco in J.M. Smucker’s control but diluted the Smucker family’s voting power from 30% to 16%. 

Institutional investors own a massive chunk of J.M. Smucker’s shares

Institutional investors own around 86% percent of J.M. Smucker’s shares, with the Vanguard Group, Inc., holding the largest chunk (12%). The top 15 shareholders have 50% of the company’s shares. 

The general public owns 10% of J.M. Smucker, which is significant but not enough to influence company decisions. Insiders, including members of the Smucker family, own 4% of the company’s stock. 

J.M. Smucker’s voting system differs from most companies with a conventional one-share, one-vote system. The company rewards shareholders who retain beneficial stock ownership for four years by awarding them ten votes per share. 

It incentivizes shareholders to hold onto J.M Smucker shares with the promise of stronger voting power. This system protects J.M Smucker from short-term investors looking to make fast profits. 

“They’ve been profitable and successful for more than 100 years,” family business consultant Dennis Jaffe told Marketplace. “That puts them in the 0.01 percentile of family businesses.”

The system forces J.M. Smucker to focus on long-term profitability rather than short-term success. Jaffe continued:

“For example, cutting corners to make a product more profitable. Doing things that are ethically sensitive in order to get shelf representation in grocery stores. This happens more frequently than people would like to admit.”

Statistics show that J.M. Smucker’s tenure voting practice has worked, with the company significantly outperforming the S&P 500. Some believe that tenure voting promotes shareholder discrimination as short-term investors have lesser sway over company decisions. 

Aeisha Mastagni, portfolio manager at California’s state teacher retirement system, said:

“A shareholder’s a shareholder’s a shareholder. It’s very dangerous territory when you start treating investors differently. We understand it sort of came from a family-owned business. Once you tap into the capital markets, the economic interests need to match the voting interests.”

J.M. Smucker’s CEO, Mark T. Smucker, is the fifth Smucker to helm the company

Mark T. Smucker

In May 2016, Mark T. Smucker became the fifth Smucker to head the company since his great-great-grandfather Jerome Monroe Smucker founded the J.M. Smucker company. He succeeded his uncle, Richard K. Smucker, who’d held the position since 2011. 

Richard succeeded Mark’s father, Timothy P. Smucker, as executive chairman of the board. Gary A. Oatey, a company executive, said:

“Mark has consistently demonstrated that he is a visionary leader, an innovator, and a steward of the Company’s unique culture. Mark has held senior positions in nearly all major businesses within the organization and has played an important role with acquisitions and business integrations over the past 18 years.”

Outgoing CEO Richard Smucker said: “Today’s announcement exemplifies the Company’s long-term succession planning and underscores the tradition of management continuity that has shaped Smucker into the company it is today.”

Smucker CEOs are known to involve themselves in the day-to-day running of the family company. According to Marketplace, they’ve ‘been known to walk the factory floor and great workers by name. 

“You know, he’d walk right up to people, and it was like his brother or his son,” Jerry Demlow said, referring to former CEO Tim Sucker. Mark T. Smucker announced his intention to preserve J.M. Smucker’s family ideals. He said:

“I look forward to working closely with Richard, the Board of Directors, our outstanding leadership team, and our talented employees across the Company, collectively serving all of our constituents – consumers, customers, employees, suppliers, communities, and shareholders.”