The countdown: Top 10 local news stories of 2013Published 6:50am Wednesday, January 1, 2014
(1) Hormel buys Skippy for $700 million, makes it part of its plan for growth
Hormel has increased its profit for five consecutive years, but it hadn’t made a major acquisition since it bought Jennie-O Turkey Store in 2001.
That changed in 2013.
Hormel announced on Jan. 3 that it had acquired Skippy peanut butter from Unilever for $700 million. The acquisition, the largest in Hormel Foods history, made international headlines and positioned Hormel as a more-diverse company with room to grow, especially internationally.
Skippy is the No. 2 peanut butter brand in the U.S. behind Jif, and the top brand in China, where Hormel CEO Jeff Ettinger says peanut butter is a growing category. Skippy’s projected $100 million in annual sales outside the U.S. — including $30 to $40 million in China — would be an immediate boost of 30 percent for Hormel’s total sales abroad.
And the acquisition may be already paying off.
Skippy is now Hormel’s largest grocery division brand — with an estimated $270 million in domestic sales for 2013 — in a division that includes Spam. The company’s grocery division reported that its volume was up 29 percent in fiscal 2013. However, excluding Skippy and the Don Miguel Mexican brand, volume was flat.
In the international division, operating profit was up 43 percent, as Skippy was the breadwinner again.
As Ettinger put it, Hormel plans to “take Skippy out of the jar.” For now, there are 11 varieties of Skippy in the U.S., including low-fat and natural varieties. But Ettinger and the company see room for growth domestically, as they “turn their creative team loose.”
“We really think we’re well situated for that to be kind of a plug-and-play brand, not only for our marketing team here in Austin, but for our sales team throughout the United States,” Ettinger said in January.
Skippy has counted among its commercial endorsers baseball star Derek Jeter and onetime Mouseketeer Annette Funicello. Norman Rockwell once illustrated Skippy’s print advertisements.
The Skippy domestic line was introduced in 1932, and peanut butter is a $2 billion business, with 74 percent of American households as buyers, making it the second-most popular sandwich in the United States behind ham.