New year, new optimismPublished 7:01am Monday, January 6, 2014
5. Hormel still growing with Skippy and international sales
Hormel is coming off another record-breaking year, with its annual profit hitting $526.2 million and its sales totalling $8.75 billion, both all-time bests. And while some may think the Austin-based company has to slow down one of these years, its executives are banking on the opposite.
Hormel’s profit increased for the fifth-straight year, and by 5 percent over last year, but the meatpacker actually set a goal of increasing by 10 percent over 2012. For 2014, the company will lean on Skippy, its newest acquisition, and Hormel International — one of Hormel’s five divisions which until recently was referred to as the “All Other” segment — to hit a double-digit profit increase.
International sales are becoming a larger part of Hormel’s portfolio, and it will be a major focus in 2014. In 2007, it accounted for just 4.6 percent of the company’s total segment operating profit at $23.1 million, but by last year, it had contributed $71.5 million, or 8.6 percent of the company’s total, and a 210 percent increase in six years. With a major focus on Asia and especially China led by the company’s iconic brands Spam and Skippy, Hormel is confident those numbers will continue to increase.
“We’re very bullish about those opportunities,” Jim Snee, president of Hormel International, said in July 2013. “And we think we’ll continue to be able to grow faster than the company.”
Skippy should help, as it’s the No. 2 peanut butter brand in the U.S. (behind Jif), and the No. 1 brand in China, where peanut butter is a growing market. Domestically, Hormel hopes to market Skippy better, and possibly create new products with it, and internationally, the company hopes to use Skippy, a fairly established brand in China, to launch Spam and provide better brand awareness for Hormel.
“We feel [our China business] has finally hit a critical mass, and we’ve seen some very significant growth,” Snee said in July.
Significant, as in a profit increase of 82 percent for the international division for the fourth quarter of 2013.