The maker of such thrifty pantry staples as SPAM lunch
meat and Dinty Moore stew has turned sophisticated. Besides canned
meats, Hormel Foods produces a slew of refrigerated processed meats
and deli items, ethnic entrees, and frozen foods, sold
under the Hormel Foods brand, as well as Don Miguel and
MegaMex Mexican, Country Crock (side dishes), and Lloyd's
barbeque. Food service 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. More than 30 Hormel Foods
brands are ranked #1 or #2 in their respective markets.
Hormel Foods operates five business segments. The largest,
Refrigerated Foods, accounts for about 50% of total sales, followed
by Jennie-O Turkey Store (about 20%), and shelf-stable Grocery
Products, such as the MegaMex Foods line, also nearly 20%.
Not so familiar with consumers, the company's Specialty
Foods segment (about 10% of sales) 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
The firm's International arm brings in the rest.
Hormel Foods subsidiaries include Alma Foods, Applegate Farms,
Diamond Crystal, and Hormel Financial Services.
While nearly 95% of the company's sales come from the
US, Hormel Foods 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. Other major markets include Mexico, Micronesia,
Singapore, and South Korea.
Hormel Foods has 35 facilities, including three plants that
process hogs and seven turkey harvesting and processing
Sales and Marketing
In the US, Hormel Foods sells its goods through sales personnel,
independent brokers, and distributors. Abroad, subsidiary Hormel
Foods International Corporation (HFIC) markets its products.
Wal-Mart is Hormel Foods' largest customer, accounting
for about 15% of the company's fiscal 2015 (ends
October) sales. The world's largest retailer purchases
products from each of Hormel Foods' five business segments.
The company has reported stable revenue growth since fiscal
2011, but saw a modest decline in 2015. That year, revenue
decreased 1% to $9.3 billion. Although the Specialty Products
showed growth (largely due to the acquisition of Muscle Milk
nutrition products), and the Grocery Products segment also grew
(based on lower meat protein input costs), those gains were
tempered by pork price deflation which impacted the Refrigerated
Foods and International segments. Avian influenza effects caused
Jennie-O Turkey Store sales to drop, as well.
Despite the dip in sales, net income continued its upward trend
in fiscal 2015, rising 14% to $686.1 million. This was primarily
due to a decrease in the cost of sales. Cash flow from operations
rose 33% to $992 million due to changes in inventories and accounts
Hormel Foods' strategy is to extend existing brands and expand
into new branded items. While SPAM may be its best known brand,
Hormel Foods has a diverse and growing portfolio of consumer
products, with Muscle Milk nutrition products as the newest
addition. The company is focusing on developing and acquiring new
products to drive sales, as well as bumping up advertising on
established brands such as Skippy peanut butter and SPAM. Hormel
Foods is also looking to grow its ethnic business at home as well
as its international sales.
Its research and development expenditures for fiscal 2015, 2014,
2013, and 2012, were $32 million, $29.9 million, $29.9 million, and
$29.8 million, respectively.
Hormel Foods operates a joint venture with Herdez
Del Fuerte to market Mexican foods in the
US. Called MegaMex Foods, it is integral to Hormel Foods'
plan to further diversify its portfolio.
In mid-2015 the company purchased organic processed meat company
Applegate, which now operates as a standalone subsidiary. The $775
million acquisition added Applegate's deli meats, frozen burgers,
and sausages into the same pantry as SPAM and Dinty Moore stew, and
advances the firm's growing push into natural and organic
Hormel Foods is building a new prepared meats manufacturing
facility in China; it will produce SPAM and refrigerated and frozen
meat items for sale in the foodservice and retail channels.
In 2014 Hormel announced that the company's SPAM Museum will be
relocating to downtown Austin, Minnesota, to support the
community's Vision 2020 project for revitalizing the city's
historic downtown area.
Mergers and Acquisitions
In May 2016, Hormel Foods acquired Justin's, LLC (Justin's),
owner of the Justin's® brand and a pioneer in
nut butter-based snacking. The company acquired Applegate Farms,
which produces natural and organic prepared meats, in 2015. That
unit now operates as a subsidiary in the Refrigerated Foods
Looking to beef up its menu of non-meat protein products, Hormel
Foods has been particularly acquisitive in recent years. In 2014
the company acquired Muscle Milk maker CytoSport in a $450 million
deal. Having earned a top spot in the $1 billion protein drink
category, CytoSport is helping Hormel Foods attract younger
customers. Previously, Hormel acquired Skippy peanut butter in 2013
from Unilever for $700 million. (Hardly peanuts, 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 believes Skippy should be a useful complement to
its sales strategy in China for the SPAM family of products.