Company rolls out easy-to-use seed, fertilizer products

By MATEUSZ PERKOWSKI

Capital Press

A major U.S. lawn and garden company has reported a significant increase in consumer grass seed sales.

In the past half-year, Scotts Miracle-Gro Co. has seen unit sales of grass seed increase 16 percent, surpassing the growth rate of several other categories, including plant food, fertilizer and some pesticides.

"We've seen steadily increased consumer demand for grass seed," said Jim King, senior vice president of corporate affairs at Scotts. "We have no reason to believe that won't continue for the rest of the year."

The company didn't disclose how the sales growth has impacted its inventories of grass seed. Inventory buildup has been blamed for low grass seed prices at the farm level.

In terms of cash value, Scotts' total product inventories have dropped nearly 12 percent, to $589 million, in the past year, according to its most recent financial report filed with the U.S. Securities and Exchange Commission.

The firm's total revenues in the past six months have grown 19 percent, to $1.12 billion, generating profits of about $119 million.

Grass seed sales have been buoyed by the introduction of a new product line, EZ Seed, which combines the seed with fertilizer and a "super-absorbent" coconut fiber medium that helps retain moisture.

Sales of EZ Seed are expected to exceed $75 million in 2010, up from about $25 million in 2009, when the product was first introduced, Scotts executives said during a recent conference call with stock analysts.

"EZ Seed is changing the face of the grass seed category," said Mark Baker, the firm's president and chief operating officer.

Another product introduction may also be in the works.

The company has introduced its Snap fertilizer spreader in several test markets in the U.S.

Instead of emptying fertilizer into a spreader, consumers attach the Snap spreader device to a fertilizer cartridge, resulting in a "no-mess, goof-proof process" for fertilizer application, King said.

In market tests, consumers have recommended that Scotts introduce a similar product for applying grass seed, said Jim Hagedorn, the firm's chairman and CEO, during the recent conference call.

The positive feedback has convinced the company to initiate a broader geographical distribution next year, though it "remains to be seen" if the device will be adapted for other applications, he said.

In general, such innovations are crucial to Scotts' retail strategy, Hagedorn said.

"Helping consumers find new and easier ways to tend to their lawn and garden is critical to growing the category," he said.

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