Hillshire Brands sets upscale product goals

by Staff
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DOWNERS GROVE, Ill. – Hillshire Brands Co. CEO Sean Connolly is focused on promoting the company’s sausage and lunch meat products to upscale consumers according to a report published in the Chicago Tribune.

Offering Hillshire Farms meats, Jimmy Dean sausages and Ball Park Franks, the new company began trading last Thursday after officially splitting from Sara Lee Corp., which is separating into a US meat business and global coffee and tea company. “We see enormous potential for growth. Meat-centric meals is a $68 billion business and we have $3 billion of it,” Connolly said.

The company’s meat business is No. 1 in its core US markets: Hillshire Farm, an almost $1 billion brand, is the dinner-sausage leader; Jimmy Dean, which also is approximately $1 billion segment, is the breakfast-sausage leader, while Ball Park Franks is No. 1 in hot dog sales. To achieve his goal of reaching 5 percent annual revenue growth, Connolly must gain market share in these niches and create new categories, such as Jimmy Dean did with its refrigerated breakfast sandwiches, the article states.

And while Connolly strategizes for success, Hillshire just might become a takeover target, warns New York-based Alexia Howard, a Sanford C. Bernstein & Co. analyst. Howard said in a June 25 report that Hillshire Brands is attractive because it offers established brands and is the only company focused almost exclusively on meat. Hormel Foods Corp. and Tyson Foods Inc. are potential suitors, she added.

Since taking over Sara Lee's meat business in January, Connelly has created a new research and development team to develop new creations, such as chicken curry meatloaf.

One of Connelly’s first responsibilities was to start trimming staff, which will save $100 million over three years, the company previously said in a statement. The downsizing is also geared to speed up how long Hillshire takes to get new products to market, he said.

According to the Chicago Tribune, Connolly is using its recently acquired Aidells gourmet sausage company to help inject innovation throughout Hillshire Brands. Aidells revenue, about $100 million per year, is growing faster than the core Hillshire sausage business. Its R&D group can also deliver new products to market in 12 weeks – almost four times as fast as Sara Lee generally took.

Chicken curry meatloaf is now moving from the Aidells development to the testing phase. If it reaches grocery stores, it could complement the brand's gourmet salami, which is being market-tested, plus chicken teriyaki meatballs. Connolly also has chefs and creative staff at the Aidells Gourmet Food Group in San Francisco working on items for all company brands.

Ball Park Franks sells $400 million a year worth of products, and Connolly wants a bigger slice of the $8 billion “better guy-food” market – also known as tailgaters and patio grillers. As a result, the company began selling Ball Park frozen burgers in April, sliders are in test.

Connolly plans to improve his company’s lunch-meat quality. In an attempt to attract consumers of this product category, he's launching super-premium smoked Hillshire sausage, which typically commands higher prices and generates faster sales growth than mainstream brands.

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