It’s that time of year again, when summer creeps in and communities ban fertilizer to make sure there are no knock-on effects with runoff into local water resources. It’s never a good time of year for consumer fertilizer companies such as Scotts Miracle-Gro (SMG), but this year they’re taking a different tack in hopes of a payoff later in the season.
Scotts is getting out there and is educating its consumers. It’s not just a fertilizer company but the world’s largest supplier of garden and lawn care products, with $1.13 billion in second quarter net sales reported in May.
The company is sponsoring events on water quality and protection of Lake Erie and redeveloping a mobile phone app that helps consumers know when and what products to use. SMG is trying to make sure that, even if buyers are not using Miracle-Gro now, they will be later.
The company has more than half of the market share in several of its segments and nearly two-thirds share in others thanks to teaming with big box stores back during their growth boom of the last decade. But it takes new kinds of thinking to ensure continued growth. SMG is focusing on educating its consumers and having a more personal relationship with them, rather than mass branding through its chemicals like fertilizers and marketing Monsanto’s (MON) consumer Roundup herbicides.
As consumers focus on getting more from what they have, improving the value of their property and exploring edible gardening is becoming more popular. SMG is an expert in these areas, so it will be deploying its own team of experts to build these kinds of long-lasting relationships with consumers. And that means a tenfold increase of its communications and education budget.
J.P. Morgan recently downgraded the company to neutral based on what it sees as “rising expenses,” according to Investors Business Daily. But during low season for fertilizers, when most category stocks take a dive, the company sought a new direction. Having recently fallen to its three-month low, SMG looks more like it is preparing for a better autumn rather than protecting itself from a quiet summer.
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