The maker of such thrifty pantry staples as Spam lunch meat and Dinty Moore stew has turned sophisticated. In addition to canned meats, Hormel Foods produces a slew of refrigerated processed meats and deli items, ethnic entrees, and frozen foods, sold under the Hormel brand, as well as Don Miguel and MegaMex Mexican, Country Crock (side dishes), and Lloyd's barbeque. Foodservice offerings include Hormel Natural Choice meats, Café H ethnic, Austin Blues barbeque, and Bread Ready pre-sliced meats. Hormel is also a major US turkey and pork processor, churning out Jennie-O turkey, Cure 81 hams, and Always Tender pork. Thirty-four Hormel brands are ranked #1 or #2 in their respective markets.
Hormel is successful not only in driving a large products portfolio with strong brand recognition but one that meets a range of consumer and foodservice operator preferences. Sales increased more than 10% in 2010 over the prior year, which helped to fuel earnings by roughly 15%. Demand for Hormel's lineup of refrigerated food and Jennie-O Turkey store businesses led the growth, aided by promotions on turkey's health benefits coupled with cheap prices, relative to beef. Wal-Mart accounted for about 13% of the company's 2010 and 2009 sales. For the 45th consecutive year, Hormel increased its dividends.
While 95% of the company's sales come from the US, Hormel boasts operations and/or joint ventures across the globe, including in Australia, Canada, China (the world's biggest market for pork), Japan, and the Philippines.
Mergers & Acquisitions
Looking to beef up its menu of non-meat products, Hormel Foods in 2013 acquired Skippy peanut butter from Unilever for $700 million. The deal represented Hormel's largest purchase ever. With about $370 million in annual sales, Skippy is the #2 brand of peanut butter in the US (behind Smucker's Jif) and the leader in China.
The company has a 51% joint venture (Precept Foods) with Cargill that markets case-ready fresh beef and pork under the Always Tender brand. Hormel operates another joint venture with Herdez Del Fuerte to market Mexican foods in the US. Called MegaMex Foods, it is integral to Hormel's plan to further diversify its portfolio. In mid-2011 MegaMex Foods purchased guacamole manufacturer Fresherized Foods, whose brands include Wholly Guacamole, Wholly Salsa, and Wholly Queso. MegaMex was bolstered in 2010 by the purchase of Don Miguel Mexican Foods, which specializes in hand-held snacks and appetizers. Hormel also branched out by scooping up the Shedd's Country Crock chilled side-dish business in the US from Unilever. The move allows Hormel to expand its offerings in both the convenient-meals and side-dish value-added marketplace.
Not so familiar with consumers, the company's specialty foods segment packages and sells a variety of sugar and sugar-substitute products, salt and pepper, liquid-portion products, dessert mixes, ready-to-drink products, gelatin products, and private-label canned meats. Its primary customers are retail and foodservice firms. The segment also makes nutritional food products and supplements for hospitals, nursing homes, and other marketers of nutritional products.
The Hormel Foundation owns approximately 48% of the company's stock. It is a charitable trust formed during World War II. – less
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