At Scotts, a crucial product for 2020
Hint: it has nothing to do with cannabis
A lot of the media coverage of Scotts Miracle-Gro’s first quarter sales growth emphasized the company’s hydroponics-focused and cannabis-friendly Hawthorne division.
And that stands to reason, given CEO Jim Hagedorn’s emphasis on the division, and its 41% year-over-year growth and $198.9 million in Hawthorne sales.
“The Hawthorne numbers are pretty amazing,” Hagedorn told investors.
But there’s more to the story of Scotts Miracle-Gro in 2020 than ballot initiatives on cannabis and the general growth of indoor gardening. There’s Performance Organics, launched a year ago and gaining momentum with “groundbreaking technology.”
“We continue to see this as one of the most important new products we’ve ever introduced,” the CEO said.
Similarly, the company’s newly formulated Ortho Ground Clear exceeded sales expectations in 2019. The product is OMRI listed, meaning it’s safe to use around organic gardens, as determined by the Organic Materials Review Institute. Scotts will provide an expanded offering and increased marketing support for the weed killer this year.
“Product stewardship, especially in the pesticide category is something we have always taken seriously here,” he added.
“Over the last 20 years, we have reformulated our fertilizers, improved our application devices, tweaked some of our pesticide formulations and sometimes even walked away from certain active ingredients. We sometimes did this even when the scientific findings showed the products were safe for use and not harmful to the environment when used as directed.”
Meanwhile, Hagedorn was relatively quiet about Roundup, which has been at the center of lawsuits – some successful – brought by cancer victims. Scotts has a long-term agreement to market and distribute Roundup to consumers at retail in the U.S. and Europe. But Hagedorn said the Roundup business and decisions around it belong to Bayer, which acquired Monsanto in 2018. Bayer is appealing jury verdicts, and it is celebrating a recent ruling by the EPA which announced the key ingredient in Roundup to be safe for use as directed.
“We’ve given them our point of view, which is private,” he told investors, in response to a question about Roundup.
At another point during his remarks to investors, the CEO, who has a reputation for bluntness during investor calls, added a heartfelt comment on the importance of retailer relationships.
“I don’t want this to sound like a bunch of bullshit,” Hagedorn said. “Our retailers are like really good friends. They trust us. They appreciate what we do. And in this battle of internet and direct sales, home centers, clubs, hardware stores, farm and fleet are all trying to hold their space. They need partners like us. And I think they appreciate us when we are on their side, too.”
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