Research Proposal

Hormel Foods


To obtain a company analysis of Hormel Foods including their brands, sales force, retailer score and why it has dropped, customer segmentation, Total Food Growth, One Hormel, their retail engagement platform, and an overview of their e-commerce.

Early Findings

Company Overview

  • Hormel Foods is a protein-focused branded food company. Its brands include its namesake Hormel, Spam, Jennie-O, Dinty Moore, Applegate, Skippy, and Muscle Milk.
  • The vast majority of the company’s revenue is U.S.-based: 63% U.S. retail, 28% U.S. food service, 7% international, and 2% other. By product type, 19% of revenue is shelf-stable foods, 19% is poultry, 56% is other perishable food, and 6% is other shelf-stable, primarily nutritional products.
  • They have grown their earnings 28 out of 32 years. Only 7 companies in the S&P 500 can say this.
  • Perishable products (fresh meats, frozen items, refrigerated meals) account for 56% of Hormel's revenue, followed by poultry (19% turkey), shelf-stable goods (19% canned meats, peanut butter, hash, stews, chips, etc.), and miscellaneous products (6% nutritional food products, dessert and drink mixes, etc.).
  • The company holds the number-one market position in turkey, shelf-stable meat, pepperoni, natural/organic deli meat, guacamole, and canned stew and the number-two position in bacon, peanut butter, and protein beverages.
  • As one of the largest consumer-branded food and meat manufacturers, Hormel’s key to success is favorably altering customers’ perceptions of its products to gain loyalty and market share. The company routinely spends around $150 million on advertising, an amount nearly five times greater than Hormel’s spending on R&D.
  • More than 40 of Hormel’s brands have No. 1 or No. 2 market share positions in their respective categories. The company estimates that No. 1 or No. 2 brands represent approximately 60% of Hormel's retail sales.


  • Hormel is segmented into Grocery Products, the Jennie-O Turkey Store, Refrigerated Foods, and International & Other. There 2nd quarter results are as follows"
  • Sales in the Grocery Products unit climbed 2.2% to $635.3 million, owing to gains from Wholly Guacamole dips, Herdez salsas and sauces, and Skippy peanut butter. These were countered by reduced sales from CytoSport products. Volumes in this unit improved 3%. Further, operating profit rallied 12.1% to $104.5 million.
  • Revenues in the Jennie-O Turkey Store segment moved up 0.5% to $305.3 million, as gains from foodservice and whole-bird sales were countered by retail declines. Volumes in the segment grew 2%. Operating profit slumped 45% to $17.7 million. This was accountable to greater-than-expected plant startup costs, elevated feed costs and soft retail sales.
  • The company’s Refrigerated Foods segment generated sales of $1,257.9 million, up roughly 1% year over year. The upside was fueled by foodservice sales of products like Hormel Bacon 1, Hormel Fire Braised and Austin Blues as well as retail sales of Hormel pepperoni, Hormel Black Label, Hormel prepared foods and Hormel Natural Choice products. Further, volumes in the unit remained flat. Operating profit fell 5.3% to $158.1 million, owing to a decline in commodity profits and escalated operational costs.
  • International & Other revenues were down 8.6% to nearly $146.3 million. The downside can be blamed on continued tariff impacts on fresh pork exports. Further, volumes in the unit declined 7%. Operating profit decreased 31.3% to nearly $14.3 million on account of tariffs and increased freight costs.
  • The company ended the quarter with cash and cash equivalents of $639.3 million and long-term debt of $250 million (excluding current maturities).

Long Term Goals

  • Evolve to a broader food company.
  • Expand and accelerate food service.
  • Become a more global food company.
  • Reduce volatility and increase balance.
  • Divest in non-strategic assets.
  • Modernize the supply chain.

Retailer Score

  • The Net Promoter Score (NPS) is used to guage customer satisfaction.
  • According to Cutomer Guru, their net score is 8.
  • The scoring system is explained here.

Research Of Interest

  • A short SWOT analysis may be viewed here.

Areas That More Guidance Are Needed

  • Total Food Growth
  • One Hormel
  • Retailer Score
Prepared By
Lisa M.
944 assignments | 5.0