Hormel Foods Corporation · NYSE:HRL
Hormel Foods — Investor Day (June 2013)
34 slides from Hormel Foods's investor day presentation, Jun 25, 2013
Slide 1: Jim Splinter, Grocery Products
Jim Splinter Grocery Products
Slide 2: By Serving The New American Family
By Serving The New American Family 2
Slide 3: The Family Unit is Undergoing a Fundamental Shift
The Family Unit is Undergoing a Fundamental Shift 3
Slide 4: Income Polarization, Generational Shifts, Ethnic Fragmentation
Income Polarization 60% of households 40% of households < $62K Per Year Household Income > Generational Shifts Ethnic Fragmentation Generation Share of Population World Economic Purchasing Power (age in 2020) (by 2015) 35% 30% 25% HISPANIC 20% AMERICANS AFRICAN AMERICAN ASIAN 15% 2010 Share 12TH 17T
Slide 5: Moms Today are Informed, Connected and Inspired
Moms Today are Informed, Connected and Inspired 5
Slide 6: Serving the New American Family
Serving the New American Family • Appealing to inspired, busy, health conscious, and value conscious moms • Products and packaging for smaller families and multicultural families • Connect consumers to products using relevant, contextualized messages • Engage consumers through correct mix of communi
Slide 7: (Hoginet)
(Hoginet)
Slide 8: Role of Protein Guides Innovation
Role of Protein Guides Innovation Sustained Energy EMOTIONAL Daily Protein Needs Maintenance Lean Tissue Success Mental No Guilt Focus PROTEIN 56g 46g Satiety FUNCTIONAL 8
Slide 9: Strategic Acquisitions
Strategic Acquisitions 2005 2009 2010 2011 2013 9
Slide 10: Key Performance Targets
Key Performance Targets Revenue Growth of 5% Organic Acquisition Brand Building & Innovation 3% to 4% + Enabling & Bolt-On 2% to 3% Operating Income Growth of 10% 10
Slide 11: Vision, Pillars & Strategic Imperatives
Vision, Pillars & Strategic Imperatives Grocery Products: Leading in Protein-Strong Convenient Foods 38% Share 47% Share 4% Share 16% Share Invest & Grow Protect & Grow Expand Integrate & Grow Brand Channel Cost & Margin Ethnic Great Innovation Equity Development Leadership Capabilities People Sourc
Slide 12: Dollar Market Share - Microwave Meals
Dollar Market Share -Microwave Meals- 38% 5% Category Growth 24% 2012 - 2013 17% $525 million 1% Category Hormel Foods Campbell’s ConAgra Private Label Source: Nielsen XAOC 52 Week Ending 4/27/13 12
Slide 13: Microwave Meals Growth Platform
Microwave Meals Growth Platform Category Profile • $525 million in sales • Tray EQ. Baseline Growth of 8% Hormel Foods MW Tray HHP Trend 15 12.6 13.4 12.1 10.5 11.5 % HHP 10 10.2 10.9 6.9 5 4.7 3.1 0 04 05 06 07 08 09 10 11 12 13 Year New Items Brand Building Household Penetration Growth Source: Nie
Slide 14: Focus is on category growth, meal occasion expansion and diverse flavor options
Focus is on category growth, meal occasion expansion and diverse flavor options Driving Brand Growth, Elevating the Category New Varieties: • Scalloped Potatoes • Cheesy Potatoes • SPAM® and Macaroni and Cheese Category Expansion Key Strategies for Growth New SPAM® Items 14
Slide 15: Vision, Pillars & Strategic Imperatives
Vision, Pillars & Strategic Imperatives Grocery Products: Leading in Protein-Strong Convenient Foods 38% Share 47% Share 4% Share 16% Share Invest & Grow Protect & Grow Expand Integrate & Grow Brand Channel Cost & Margin Ethnic Great Innovation Equity Development Leadership Capabilities People Sourc
Slide 16: Dollar Market Share - Luncheon Meat, Chili, Hash, Stew
Dollar Market Share Dollar Market Share -Luncheon Meat- -Chili- 5% 1% CAGR CAGR 2011 - 2013 2011 - 2013 $524 million $224 million Category Category SPAM® brand Hormel® Chili Dollar Market Share Dollar Market Share -Hash- -Stew- 5% -3% CAGR CAGR 2011 - 2013 2011 - 2013 $100 million $90 million Catego
Slide 17: Legacy Core Growth Platform
Legacy Core Growth Platform Category Profile • $1.3 billion in sales • 43% household penetration Growth through innovation Build brand equity Target occasional users New Items Brand Building Key Strategies for Growth 17
Slide 18: SPAM Goal: Activate Occasional Users
SPAM Goal: Activate Occasional Users Listen Talk See Believe 18
Slide 19: Marketing Investments
Marketing Investments 19
Slide 20: Hormel Chili Growth
® HORMEL Chili Increase Buy Rate w/ Re-Engage Innovation Category Occasionals Consumers Growth Chili Category +4% 35 Hormel® Chili +15% 30.2 31.3 30 Millions (Pounds) 25 12.2 14.0 20 15 10 18.0 17.3 5 0 2012 2013 4 WKS End 2/4/12 4 WKS End 2/2/13 Data Source: Nielsen Hormel Chili A/O Chili 20
Slide 21: Vision, Pillars & Strategic Imperatives
Vision, Pillars & Strategic Imperatives Grocery Products: Leading in Protein-Strong Convenient Foods 38% Share 47% Share 4% Share 16% Share Invest & Grow Protect & Grow Expand Integrate & Grow Brand Channel Cost & Margin Ethnic Great Innovation Equity Development Leadership Capabilities People Sourc
Slide 22: Dollar Market Share - Mexican Foods
Dollar Market Share -Mexican Foods- 14% 2.8% 11% CAGR 2011 - 2013 $9.9 billion category 5% 4% 2% 2% Pepsico Gruma General Mills Campbell’s B&G (Tostitos) (Mission) (Old El Paso) (Pace) (Ortega/Las Palmas) Source: Nielsen XAOC 52 Week Ending 4/13/13 22
Slide 23: Leading brands of salsa and tortillas across channels
Leading brand #1 Selling mole & of authentic nopalitos- Leading brand of salsa Leading brand of salsa salsa United States and tortillas- and sauces- Eastern United States Western United States Hispanic/Mexican Dairy/Deli Leading hot sauce & #1 Share of peppers- Western United States tomato sauce bra
Slide 24: Innovation
Innovation Cooking Sauces: Roasted Pasilla Chile, Tomatillo Verde, Red Guajillo Mexican Snacking Destination Set Chile, Traditional Chipotle 24
Slide 25: Innovation
Innovation Varieties: • Egg, Bacon, Hash Browns, & Cheese • Egg & Sausage • Triple Play Breakfast • Egg & Sausage Chimichangas • Egg, Bacon, Cheese & Jalapeno Varieties: • Mini Chicken and Beef Tacos • Grilled Chicken Quesadilla • Chipotle Chicken & Cheese Flautas • Taquitos • Fajita Bites 25
Slide 26: Innovation
Innovation 26
Slide 27: Vision, Pillars & Strategic Imperatives
Vision, Pillars & Strategic Imperatives Grocery Products: Leading in Protein-Strong Convenient Foods 38% Share 47% Share 4% Share 16% Share Invest & Grow Protect & Grow Expand Integrate & Grow Brand Channel Cost & Margin Ethnic Great Innovation Equity Development Leadership Capabilities People Sourc
Slide 28: Strategic Fit of SKIPPY
Strategic Fit of SKIPPY ® • Growing value-added non-meat protein • Adds earnings stability/margin accretion • Extendibility into other on-trend categories • Relatively easy to integrate and manage • Fit to current “protein” portfolio • #2 brand position and the #1 share in “natural” • Levers center
Slide 29: Strong Business Fundamentals
Strong Business Fundamentals U.S. Peanut Butter Equivalent Units U.S. Peanut Butter $ Category Growth Category Growth + 30.4% equivalent in billions units in millions + 3.3% + +8.6% 8.6 $2.0 + 1.0% + 2.3% Growth: + 4.5% 57.2 $1.6 56.6 $1.5 Growth: $1.4 55.4 53.0 2009 2010 2011 Latest 2009 2010 2011
Slide 30: Growing Consumption Trends
Growing Consumption Trends Annual Peanut Butter Eating Peanut Butter Sandwich Occasions in the U.S. Usage is Very Stable Per capita 30 Peanut Butter 28 28 27 27 27 25 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 5’12 2005 2006 2007 2008 2009 2010 2011 Years
Slide 31: U.S. Peanut Crop Dynamics
U.S. Peanut Crop Dynamics Market is returning to historical norms after 2011/2012 aberration PEANUT PRODUCTION (billions of lbs.) HISTORIC HISTORICPEANUT PEANUTPRICES PRICES– –FOB FOBSHELLING SHELLINGPLANT PLANT Average Price 6.10 $0.47 $1.08 4.20 3.70 3.70 Current Market 2009A 2010A 2011A 2012E $0.
Slide 32: FUN: Embody the sheer joy of being a kid
FUN HEALTH-CONSCIOUS Embody the sheer joy Focus on healthy lifestyles of being a kid and kid nutrition ICONIC FAMILY-ORIENTED Stay relevant in pop Know our consumer and culture what is important to them FORWARD-THINKING TASTE-DRIVEN Offer on-trend variants, Recognize that taste is king such as Natur
Slide 33: Our innovation approach to spreads will follow a process similar to MegaMex Foods JV
Our innovation approach to spreads will follow a process similar to our MegaMex Foods JV 33
Slide 34: The End
The End 34