|james Snee, chairman, president and CEo of Hormel Foods|
“This is not our parents’ deli,” Snee said during a Feb. 22 presentation at the Consumer Analyst Group of New York conference in Boca Raton. “The deli is no longer only a place where you order a pound of your favorite protein sliced to your desired thickness ... today terms like quarter pound, half pound, paper thin, extra thick are joined by words like charcuterie, artisanal, crafted and millennials.”
Austin, Minnesota-based Hormel Foods has identified the deli as a $35 billion opportunity and its next growth engine. The growth of the deli is far outpacing other parts of the retail outlet and out pacing total food by more than four times, Snee said.
“The next segment is grab-and-go. And grab-and-go is where you’ll find typically prepackaged meats, prepackaged cheeses or perhaps the combination of the two.
“Next, prepared foods. This is no longer about just macaroni and cheese and mashed potatoes. As consumers continue to have less and less time, they are now including this area of the store in their consideration set for on-the-go food, and retailers are looking for higher-quality signature offerings.
“And all of these segments combined, they’re all significant in size and growing.”
Hormel Foods acquired Columbus Manufacturing, a producer of salami, Italian specialty meats and deli meats, last year for $850 million. This deal has positioned the company to “compete and win in the deli of the future,” Snee said.
“Hormel Foods has always had a strong product representation in many of the deli segments, but the acquisition of Columbus really helped us close some of those gaps with items like charcuterie trays and high-quality artisanal meats,” Snee said. “Additionally, our unmatched array of deli solutions far outpaces any of the competitors’ in this space, and they simply cannot match the breadth or depth of our solutions.
The company also has a growing presence in the $4.2 billion grab-and-go section with Hormel Gatherings party trays and culinary pairings, plus new Columbus items. Within the $10.2 billion in-store restaurant segment, Hormel brings a broad range of food service brands including Austin Blues, Cafe H and Fontanini, he said.
“And when you put it all together, we now bring unmatched knowledge in both deli and foodservice, expertise in bringing solution-based selling and game-changing innovation while leveraging incredibly powerful brands to this high-growth area,” Snee said. “Hormel, Hormel food service, Jennie-O, Applegate and now Columbus, truly a dream team of brands.”
“This role will consolidate all deli sales into one highly focused division reporting into Refrigerated Foods,” Snee said. “Jeff most recently led our highly successful food service business, and he also has deep retail deli experience. He will be able to leverage our foodservice strategy as he understands how to manage and motivate a direct sales organization and provide thought leadership, solution-based selling and industry changing innovations to the marketplace.”
Combined, the new deli group provides meaningful scale with nearly $1 billion in sales. The addition of Columbus expands Hormel Foods’ total points of distribution by 41 percent.
Net earnings attributable to Hormel Foods in the first quarter ended Jan. 28 were $303,107,000, equal to 57 cents per share on the common stock, up from $235,147,000, or 44 cents, in the year-ago period. Net sales increased to $2,331,293,000 from $2,280,227,000.