Company transitioning to three operating segments to drive sustainable growth
Hormel Foods Corporation (NYSE: HRL), a Fortune 500 global branded food company, on Tuesday announced a new strategic operating model, aligning its businesses to be more agile, consumer and customer focused, and market-driven. Effective Oct. 31, 2022, the beginning of fiscal 2023, the company is transitioning to three operating segments – Retail, Foodservice and International. The One Supply Chain team will continue to oversee the company’s global supply chain.
“Hormel Foods is a distinctly different company than it was a decade ago, with a food forward, growth-oriented portfolio of leading brands and products that are aligned with our customer and consumer needs,” said Jim Snee, chairman of the board, president and chief executive officer at Hormel Foods.
“Our new operating model is a culmination of our recent strategic actions, which included numerous portfolio-building acquisitions, including the Planters® snacking business, the creation of One Supply Chain, the modernization of our technology and ecommerce capabilities, and most recently, our transformational efforts at Jennie-O Turkey Store. This new alignment will empower our 20,000 global team members with a more refined organizational structure that is accountable, nimble and focused on creating the Hormel Foods of the future.”
The new operating model will support the company’s six strategic priorities:
- Expand leadership in foodservice;
- Protect and grow its core brands;
- Aggressively develop its global presence;
- Amplify scale in snacking and entertaining;
- Enhance the growth of its ethnic and food-forward portfolios; and,
- Continue to transform the company.
The company’s largest operating segment – Retail – will include its most iconic brands, many that hold a No. 1 or No. 2 market share in their respective categories. The retail segment will be focused on Hormel Foods’ powerhouse consumer brands in the retail marketplace.
These brands include the recently acquired Planters® and Corn Nuts®, in addition to SPAM®, SKIPPY®, Columbus®, Applegate®, Hormel® Natural Choice®, Jennie-O®, Hormel® Black Label®, Herdez®, WHOLLY® and Justin’s®. The new Retail segment will be led by Deanna Brady, who will be the executive vice president of Retail. Brady currently oversees the company’s Refrigerated Foods segment.
The Retail segment will be powered by a new center of excellence called Brand Fuel. Over the last several years, the company has focused on the importance of leveraging its innovation, consumer insights and technology to enable connections with consumers where and how they shop.
Brand Fuel will be a food-forward hub, housing brand management expertise, world-class marketing capabilities and insights-led innovation, and will further enable data-driven decisions for the enterprise. This center will also house the Digital Experience Group, the company’s ecommerce and digital content team that supports the company’s brands and businesses in the virtual marketplace.
The Foodservice operating segment will serve leading foodservice establishments, including restaurants, hotels, educational and health care institutions, convenience stores and entertainment venues. The company’s sales into the foodservice channel have continued to experience growth due to its portfolio of branded, value-added products and market leadership positions in the pizza toppings and bacon categories.
The new Foodservice operating segment will combine the company’s domestic foodservice businesses and will remain focused on partnering with customers to deliver culinary solutions for today’s dynamic environment. This segment will be led by Mark Ourada as group vice president of Foodservice.
The International segment will continue to focus on aggressively growing its presence outside the United States. This includes growing global brands such as SPAM® and SKIPPY®, accelerating growth and investment in China, Brazil and Indonesia, and further leveraging its partnerships in the Philippines, South Korea and Europe.
The company recently announced a new R&D and innovation center will be opening in China in the fiscal year 2023 to serve as its food-forward innovation and culinary creation hub for the Asia-Pacific region. Swen Neufeldt will continue to lead the company’s international business as group vice president, president of Hormel Foods International Corporation.
Hormel Foods will begin operating under the new model on Oct. 31, 2022. Earnings will be reported under this structure beginning in the first quarter of fiscal 2023. Changes to the company’s operating segments have no impact on historical consolidated results of operations, financial position or cash flows. Recast financial information will be provided at a later date to aid in comparability to historical financial data.
Updates on the new strategic operating model will be provided on the fiscal third-quarter earnings call, scheduled for Sept. 1, 2022, and during the company’s presentation at the Barclays Global Consumer Staples Conference, scheduled for Sept. 6, 2022.
Hormel Foods worked with Bain & Company, one of the world’s top global management consulting firms, on the initiative.