Hormel, Herdez Del Fuerte to enter into j.v.
June 19, 2009
by Keith Nunes
AUSTIN, MINN. — Hormel Food Corp. and Herdez Del Fuerte S.A. de C.V., Mexico City, have created MegaMex Foods, a joint venture between the two companies to market Mexican foods in the United States. When completed, the venture will expand the existing agreement between the two companies and produce a revenue stream of approximately $200 million, according to Hormel Foods. Brands included in the joint venture include Chi-Chi’s, Herdez, La Victoria, Embasa, Dona Maria and others.
MegaMex Foods will have an independent management team based in Chino, Calif., but rely on the parent companies for efficiencies in manufacturing, research and development and supply chain management.
The organization of MegaMex Foods is expected to be completed around Oct. 26, which coincides with the start of fiscal year 2010 for Hormel Foods. Formation of the expanded joint venture is conditioned upon the parties reaching agreement on the structure and agreements relating to product manufacturing, management services, and product and trademark licenses, and upon other conditions.
"This expanded, long-term agreement with Herdez Del Fuerte is an example of how we continue to look to diversify our product portfolio," said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer at Hormel Foods. "MegaMex Foods will have the scale and skill set to establish leadership in Mexican foods and grow the category. The collaboration should allow us to better serve both the growing U.S. Hispanic population and the vast numbers of the general population who love Mexican food."