Hillshire to take brands beyond categories
by Keith Nunes
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BOSTON – One year after Hillshire Brands was spun off from Sara Lee Corp., company executives are looking beyond the reestablishment of the company’s brands and business and toward expanding the markets where it competes.
“We reject the notion that these brands have to be limited to the categories where they started,” said Sean Connolly, president and CEO, during the Barclays Back-to-School Conference on Sept. 3. “Jimmy Dean is clearly much more than a raw sausage business. Jimmy Dean today is all about hardy, comfort food. Ball Park is proving that it is not a hot dog, that it’s better guy food for better guy times.
“Broadening the position is really going to be key to unlocking the full potential of these brands. This is what turned Jimmy Dean into a $1 billion brand and is what will continue to drive our growth.”
Innovation has been at the heart of the company metamorphosis, Connolly said.
“Branded ready meals represent not only the highest margin portion of our portfolio, but the fastest-growing portion of our portfolio and typically there, we also see the lowest elasticity of demand, things like Jimmy Dean breakfast bowls, Jimmy Dean breakfast sandwiches, you open the box, you heat it and eat it. It’s ready to go when you are.
“I think that reflects the consumer dynamic is such that consumers are always looking for convenient foods. They don’t have a lot of free time; they need convenient foods to fit into their life. They don’t have a lot of culinary skill. That’s where these products come in. So as you look at our future innovation, it will be in this branded value-added space. Increasingly, it will be in the branded ready meal space and by the way, that’s what drives our margin structure.”
Hillshire Brands generated more than $300 million in sales this past year from new products introduced during the past three years. Connolly said the company wants to achieve 13 percent to 15 percent of its annual revenue from innovations it launched during the past three years. Historically the number has been 9 percent, but Hillshire Brands moved the needle to 11 percent in 2012.
“For the first time, we also built out a pipeline that we feel confident we can really build the momentum we’re looking to here and ultimately get to our long-term metrics,” he said.
Innovations in the pipeline to be introduced during the second half of the year include new products from Ball Park and Hillshire Farm, specifically in the smoked sausage and lunchmeat categories.