Hormel eyes Hispanic market
Published 12:47 pm Wednesday, February 1, 2012
As Hormel Foods Corp. looks to 2012, its executives have their sights locked on the Hispanic market.
Citing growth in the United States’ Hispanic population, James Splinter, Hormel’s group vice president of grocery products, predicted Tuesday night at the company’s annual shareholders’ meeting that Hormel’s MegaMex brand will “grow at an accelerated rate.”
“Every time I hear (about the Hispanic population increase), I get very excited about the growth prospects of MegaMex,” Splinter said at the meeting in Austin High School’s Knowlton Auditorium.
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Hormel and Herdez del Fuerte created MegaMex in 2009, which now distributes Hormel’s Mexican brands, including Herdez, Chi-Chi’s, La Victoria, its 2010 acquisition Don Miguel, and its 2011 acquisition Wholly Guacamole (under Fresherized Foods).
“MegaMex provides a platform that’s really the only one in the United States that has this depth and cross section of products,” Hormel president and CEO Jeff Ettinger said in a press conference before the meeting. “We’ve been involved in ethnic food for about the last 15 years, but we’ve really chosen to focus our energy on Mexican food because the cuisine is so popular here in the United States.”
Ettinger spoke at the meeting about Hormel’s steady growth since 2006 — the year he became CEO — and how one segment or another has “picked up the slack” for others, and he sees MegaMex as the breadwinner of the future.
Hormel’s fiscal 2011 net earnings jumped 20 percent in 2010 and increased for the third consecutive year. The company recorded fiscal 2011 net earnings of $474.2 million, or $1.74 per share, compared to $395.6 million last year, or $1.46 per share. Annual revenue also increased 9 percent to $7.9 billion from $7.22 billion.
“Our team had another outstanding year,” Ettinger said. “I’m very excited about the overall results.”
Ettinger credited Hormel’s strong fiscal 2011 to marketing programs and advertising for its traditional product lines, some “innovative new items” such as the Pepperoni Minis, and Hormel’s recent acquisitions.
“We’re very proud that the team has been able to work through a difficult environment in terms of the overall economy, and yet still continue to grow our business,” Ettinger said.
An anniversary and an open house
This year marks the 75th anniversary of Hormel’s iconic Spam, and the company looks to mark that milestone in style.
Ettinger announced Tuesday that Hormel will celebrate the canned luncheon meat — along with the completion of its corporate office expansion — with an open house on July 28.
“That will be an event we’re really looking forward to,” Ettinger said.
Ettinger said the company continues to see growth for Spam in the U.S. and internationally, and they have a friendly rivalry between the domestic team and the international team to see who can end up with the most sales.
“It’s pretty even right now,” Ettinger said. “Spam is our largest franchise outside the United States. … and the 75th anniversary will certainly put more energy behind that great brand.”
As Spam’s 75th anniversary approaches, Hormel will launch a series of humorous TV advertisements, two of which premiered at the meeting. Hormel showed off 10 ads, including two domestic and one Asian market Spam ads, and two domestic and one Spanish language MegaMex ads. Hormel spent $115.3 in advertising in fiscal 2011 and plans to continue a similar plan in 2012.
Ettinger said in early March they hope to wrap up the 28,000-square-foot expansion, the first for Hormel corporate in more than 20 years.
“We’re really excited to see it completed,” he said.
Spammy and the fight against hunger
Ettinger also touted the company’s 2011 launch of Spammy, a vitamin-fortified, nutritional turkey spread to fight hunger in Guatemala, and other hunger relief efforts throughout the United States.
Hormel announced at the meeting it distributed over 1 million cans of Spammy to children in Guatemala last year, a note that was met with a rousing applause from attendees.
“We were surprised and pleased how well the product went into the local diet, so anecdotally we’re hearing just great results from their teachers and parents and the kids themselves,” Ettinger said.
Hormel also donated over $5 million to hunger relief in the United States last year, including $110,000 to local hunger-relief organizations in 16 communities where it has manufacturing facilities.
Gestation crate free by 2017
Not everyone attending Tuesday’s meeting was there to applaud Hormel’s plans and accomplishments. A representative with the Humane Society of the United States spoke on behalf of the organization’s concern with Hormel’s use of gestation crates for hogs. The use of the crates, which do not allow for a pig to turn around, have been banned in seven states. The Humane Society representative asked Ettinger when Hormel would begin to move away from the practice, as many of its large corporate meat producing competitors have.
Ettinger responded that they have facilities in three states — Arizona, Colorado and Wyoming — that use gestation crates, but all will be phased out by 2017. Ettinger said they will phase out the crates in Arizona by 2013 and Colorado by 2017, both in accordance with state laws, and they chose to phase out the crates in Wyoming by 2017 as well.
“We’re comfortable with our position and having that consistent approach going forward,” he said at the press conference about phasing out all gestation crates.
Also during the question and answer portion, Rod Huinker, of Austin, who said he was attending his 24th consecutive shareholders meeting, spoke about the 1985 Hormel strike and how 50 workers, including himself, still haven’t gotten their jobs back.
Ettinger responded that while he wasn’t at Hormel at the time, he has the greatest respect for then-CEO Richard Knowlton and the leaders who were managing the company, and he has the highest confidence they made the decisions they thought were right. He also said while he can’t revisit it over 25 years later, he has great respect for the workers and what they contributed.