About Rochelle Foods, LLC

The maker of such thrifty pantry staples as SPAM lunch meat and Dinty Moore stew, Hormel Foods produces a slew of refrigerated processed meats and deli items, ethnic entrees, and frozen foods, sold under the flagship Hormel brand, as well as Don Miguel and MegaMex (Mexican), and Lloyd's (barbeque). Food service offerings include Hormel Natural Choice meats, Café H, Austin Blues, 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 brands are ranked #1 or #2 in their respective markets.

Operations

Hormel Foods operates five business segments. The largest, Refrigerated Foods, makes pork and beef products and includes the company's 50%-owned Precept Foods joint venture, and accounts for about 50% of total sales. The Jennie-O Turkey Store segment is the next biggest earner (at about 20%), and the shelf-stable Grocery Products segment, which counts on products such as the MegaMex Foods line, also accounts for around 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 products.

The firm's International arm brings in the remaining revenue.

Hormel subsidiaries include Alma Foods, Applegate Farms, Diamond Crystal, and Hormel Financial Services.

Hormel sources its hogs from suppliers in Minnesota, Iowa, Utah, Nebraska, Kansas, and Colorado. The Jennie-O Turkey Store segment rears around 75% of its turkey requirements itself, while the remainder comes from contracted independents.

Geographic Reach

Hormel is based in Austin, Minnesota. 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. Other major markets include Mexico, Micronesia, Singapore, England, and South Korea, and products are marketed in more than 75 countries.

Hormel has 28 facilities, including three plants that process hogs and seven turkey harvesting and processing locations.

Sales and Marketing

In the US, Hormel sells its goods through sales personnel (850), independent brokers, and distributors. Abroad, subsidiary Hormel Foods International Corporation (HFIC) does Hormel's marketing.

Wal-Mart is Hormel's largest customer, accounting for nearly 15% of Hormel's sales. The world's largest retailer purchases products from each of Hormel's five business segments.

The five largest customers in each segment make up the following approximate percentage of segment sales: 46% of Grocery Products, 36% of Refrigerated Foods, 40% of JOTS, 37% of Specialty Foods, and 22% of International & Other.

Hormel spent $204.1 million on advertising expenses in fiscal 2016, up from $145.3 million, and $114.4 million in fiscal 2015, and 2014, respectively.

Financial Performance

In fiscal 2016 (ended October), revenue climbed 3% to $9.5 billion, putting the company back onto its previous growth trajectory after a small sales decline in fiscal 2015. Refrigerated Foods grew the most in real terms, up $275 million, while Jennie-O Turkey Store and Grocery Products also grew strongly. The 53-week financial year also added to sales figures. Specialty Foods declined by 15%, due in part to the sale of Diamond Crystal brands in mid-2016, while International & Other also fell, by 4%.

Net income jumped 30% to $891 million amid a broad-based increase in profitability among Hormel's segments (International aside, which was flat). Cash generated by operating activities was unchanged on prior year.

Strategy

Hormel's strategy is to extend existing brands and roll out new brands. While SPAM may be its best known brand, Hormel has a diverse and growing portfolio of consumer products, with Muscle Milk nutrition products being 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 is also looking to grow its ethnic business at home and abroad.

The company's Precept Foods joint venture with Cargill 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-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 foods.

Hormel 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.

Mergers and Acquisitions

Hormel agreed to purchase in late 2017 Columbus Manufacturing, a California-based maker of deli meat and salami. The deal, worth about $850 million, will add more specialty, craft, and artisanal meats to Hormel's portfolio, which is key to capture changing consumer tastes.

In 2016, Hormel acquired Justin's, LLC, a maker of nut butter products such as spreads, squeeze packs, peanut butter cups, and snack packs. Hormel paid $280.9 million for Justin's, which will bolster Hormel's nut butter-based snacking category.

The company acquired Applegate Farms, which produces natural and organic prepared meats, for $775 million in 2015. Applegate is now a subsidiary of the Refrigerated Foods segment.

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Rochelle Foods, LLC

1001 S Main St
Rochelle, IL 61068-2190
Phone: 1 (815) 562-4141

Stats

  • Employer Type: Public
  • Safety Director: Paul Hardcastel
  • Manager: Cal Jacobs
  • Office Manager: Paul Kuehneman
  • Employees: 700

Major Office Locations

  • Rochelle, IL