BOCA RATON, Fla. – Since its spinoff from Sara Lee this past year, Hillshire Brands has been focused on innovation and delivering products to market that Sean Connolly, chief executive officer, said must be “contemporary, relevant and provocative.”
During an interview at the Consumer Analyst of New York (CAGNY) conference, held in Boca Raton Feb. 19 to 22, Connolly said creating loyal consumers is critical in today’s economy.
“Our belief is the consumer is going to remain very discerning,” Connolly said of the current economic environment. “They have tougher standards than they had before, and they are going to hold those standards. That means our products have to be really differentiated. The reason differentiation is important is because it helps you break through the clutter and create loyalty between the consumer and the brand.”
Hillshire Brands features an array of well-known meat-centric brands, including Hillshire Farm, Jimmy Dean, Ball Park, State Fair and Aidells. Since the spinoff, Hillshire has been sending new products to market at a rapid pace, and has even more on tap for 2013.
New products already introduced include flatbread sandwiches under the Jimmy Dean brand, lean hot dogs under the Ball Park banner, and on tap for later this year is Hillshire lunch meat in new packaging format, Hillshire Black Label premium deli meat, meat loaf and meatballs from Aidells, and a new line of hot dogs under the State Fair brand.
There was a lot of talk at CAGNY about how current market conditions resemble a barbell, with value representing a large portion of the market on one end, premium products capturing a large share of the market at the other end, and mainstream products facing thin demand in the middle.
Connolly said the effect of the barbell analogy is overstated.
“I think the bulk of the volume is mainstream brands,” he said. “Private label is in the mid-single digits and the ultra-premium category is not enormous. So by deductive reasoning what you are left with is real scale in mainstream brands. That’s why our first priority is building our core business. It’s big, it’s where the consumers are, and they want us to refresh our brands.”
Some segments of the frozen food category have been challenged in recent years, but Connolly said one reason may be a lack of innovation in the category.
“We’ve been focused on breakfast and we have driven growth in breakfast,” he said. “And the way we drove the growth in breakfast was by being relentless on innovation.
“When I look at the other day parts, particularly dinner, what I’ve seen is a space that has not been relentless on innovation. It is not surprising to me that the performance has been sluggish. I don’t play in that space today, but I think what we’ve done at breakfast is just further validating that the consumer needs to see products that are contemporary, relevant and provocative, or they will choose something else.”
Achieving relevant innovation requires insights that lead to products that meet a consumer need and are appealing.
“The case study example for our company is frozen breakfast sandwiches,” Connolly said. “There was huge breakfast consumption in America and a lot of it was entirely grain-based. So it was high in carbs, high in sugar, but low in protein.
”An efficient way to get protein into that day part was in breakfast sandwiches. Now, interestingly, the consumer behavior at home of making breakfast sandwiches was always well developed, but there wasn’t a way to conveniently get those products until we came along with Jimmy Dean breakfast sandwiches.”
Later this year Hillshire Brands will attempt to repeat its success with breakfast sandwiches with the introduction of a meat loaf and meatballs under the Aidells brand.
“Meat loaf is a category that has been around forever and considered old fashioned,” Connolly said “People eat it, but it is not seen as very exciting. Well, when Aidells makes meat loaf what you get is chipotle barbecue meat loaf.
“We will also be taking meatballs, which is a fairly commoditized product category, and making it with habaneros and green chilies.”
While most of Hillshire’s brands are synonymous with meat, Connolly sees meat as an ingredient rather than the focal point of the company’s product lines.
“Here is the data point that fits well with our strategy of activating impossibilities,” he said. “When we look at consumer behavior and we look at the number of eating occasions in their diet that contain meat, it has steadily been on a slow rise. We can see the data that goes back 10 to 12 years. Eating occasions that contain meat per capita have been increasing.
“What is happening is consumers are eating meat differently. They are not eating meat in bulk. Instead of sitting down and having just a steak they are eating food with steak in it.
“That’s why we are innovating differently. We are not innovating just meat solutions. We are innovating foods with meat in it as the hero ingredient. That’s a good thing as we run the business. The total weight of the product is not 100 percent meat, which means if meat moves in terms of cost there is some insulation there. It can be a better margin product.
“There is the dynamic that people are eating fewer pounds of meat but the fact they are eating products with meat in it more frequently bodes well for us.”