Hormel Foods Corporation · NYSE:HRL
Hormel Foods — Investor Day (June 2015)
31 slides from Hormel Foods's investor day presentation, Jun 11, 2015
Slide 1: Jennie-O Turkey Store
Jennie-O Turkey Store Glenn Leitch Group Vice President President, Jennie-O Turkey Store
Slide 2: Agenda
Agenda • Industry metrics • Impact of avian influenza • Brand strength • Value added growth • Summary
Slide 3: Total Industry Live Weight Harvest Pounds
Total Industry Live Weight Harvest Pounds 750 700 Million Pounds 650 600 550 500 450 2013 2014 2015
Slide 4: Avian Influenza Impact
Avian Influenza Impact Jennie-O Turkey Store data as of 6/11/2015 • 66 farms impacted • 2H15 sales guidance • Down 15% YOY • 2H15 margin guidance • 10% to 12%
Slide 5: Detection of Infected Minnesota Flocks
Detection of Infected Minnesota Flocks Total Poultry Industry Commercial Flocks 35 33 30 25 20 15 13 12 12 10 8 7 5 4 3 3 2 2 1 0
Slide 6: Age of Infected Commercial Flocks
Age of Infected Commercial Flocks (initial turkey cases – JOTS only) 30 25 20 Avg. Infected Age = Age 15 Age 15.5 weeks 10 5 0 0 5 10 15 20 25 Cases
Slide 7: Jennie-O Turkey Store Adjustments
Jennie-O Turkey Store Adjustments • Faribault moved to one shift May 25 • Melrose at 8-12 four day weeks • Barron and Willmar likely to experience adjusted shifts through the summer • Working on additional live production for 2016
Slide 8: Turkey Markets
Turkey Markets Breast Meat • Supply had been up 4.00 • Demand has been good (except for exports) 3.50 • Cold storage still tight but 3.00 had been growing 2.50 • Processors now holding on 2.00 to surplus inventory 1.50 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct F13 F14 F15
Slide 9: Turkey Markets
Turkey Markets Frozen Thigh Meat $1.90 $1.80 • Softer exports provide $1.70 $1.60 opportunity for dark $1.50 meat purchases $1.40 $1.30 $1.20 $1.10 $1.00 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct F13 F14 F15
Slide 10: Positioned for Long-Term Growth
Positioned for Long-Term Growth Net Sales $1,800 $1,600 $1,400 $1,200 Millions $1,000 $800 $600 $400 $200 $0 2009 2010 2011 2012 2013 2014
Slide 11: Brand Leadership
Healthy/ Brand Leadership Holistic Jennie-O® has emerged as a clear category leader in turkey and the brand is now found in households nationwide. Total Awareness Household Penetration Jennie-O® Brand Jennie-O® Brand General Population 2014 2009 24% (+0.4pt vs YAGO) Millennials Credited to ongoing a
Slide 12: Brand Leadership
Healthy/ Brand Leadership Holistic Brand Imagery Total Purchase Intent Jennie-O® Brand Jennie-O® Brand 60% JENNIE-O® brand is strongly 50% associated with the following imagery: 40% 30% Is good for a healthy lifestyle 20% Is a brand I would feel good 10% about serving 0% 2009 2014 Tastes good
Slide 13: Make The Switch Campaign
® Make The Switch Campaign Healthy/ Holistic Launch : 2010 Launch : 2012 Launch : 2014 5-Year Projected Net 3-Year Projected Net 2-Year Projected Net Sales CAGR of Sales CAGR of Sales CAGR of Advertised Products: Advertised Products Advertised Products: +18% +39% +19%
Slide 14: Statistics
Statistics Jennie-O Turkey Store uses a multi-prong approach to reaching consumers - from social media to public relations, from grassroots level sampling to national prime time television
Slide 15: Driving Ground Turkey Sales Growth
Driving Ground Turkey Healthy/ Holistic Sales Growth • Health-conscious millennials are embracing “fresh” and the Jennie-O® brand • Jennie-O® product distribution continues to expand • Ground beef price inflation is enhancing the value proposition
Slide 16: Fresh Ground Turkey Growth vs. Ground Beef
Fresh Ground Turkey Growth vs. Ground Beef - 2.9% + 12.0% + 11.4% + 16.9% + 15.0% - 6.9% - 9.5% + 11.1% - 6.4% - 8.3% - 7.4% + 9.6% - 7.6% + 14.2% - 8.7% - 7.0% + 21.9% Ground Beef Average retail price per pound for 13 weeks ended 1/24/15 was $4.34 +19% vs. LY Ground Turkey Fresh ground beef and gro
Slide 17: Ground Turkey Share is Growing
Ground Turkey Share is Growing Ground Beef Ground Turkey Share of Ground Meats 12.6% Pounds Sold 1.9B 264M 10.9% 11.1% 11.4% 10.5% 9.6% Retail Value $6.9B $922M 1 Share Point = 21 Million Pounds Healthy/ 2009 2010 2011 2012 2013 2014 Holistic Source: Perishables Data
Slide 18: Driving Growth: Ground Turkey
Driving Growth: Ground Turkey Jennie-O ® Lean Ground Turkey Ranks #2 Among All Exact Weight Items in the Meat Department Nationally IRI: Latest 52 Weeks Ending 03-22-15 Measures : Dollar Sales Product Total US - Multi Outlet 1 OSCAR MAYER NATURAL HARDWOD SMKD BACON SLICED RFG 16 OZ - 0044700019881 $
Slide 19: Driving Growth: Fresh Breakfast Sausage Rolls
Driving Growth: Fresh Breakfast Sausage Rolls 3 Year CAGR = 132% Ranked 6th Nationally Among all Roll Sausage SKU’s 3 years ago 2 years ago 1 year ago 52 Wks Ending 3-15-15 Volume Sales %Change vs Change IRI - LASTEST 13 WEEKS ENDING 3-15-15 Current YA vs YA JIMMY DEAN PORK SAUSAGE ROLL 16OZ 9,524,3
Slide 20: Driving Growth: Oven Ready
Driving Growth: Oven Ready Oven Ready Shipped Volume From Freezer to Oven to Perfect! 3 Year CAGR = 13% Healthy/ 3 years ago 2 years ago 52 Wks Ending Holistic 3-15-15
Slide 21: Driving Growth: Turkey Breast Sticks
Driving Growth: Turkey Breast Sticks NEW PRODUCT : All Natural Turkey Breast Sticks • Single-serve packaging • Clean ingredient statement • Portable Healthy/ On-the- Holistic Go
Slide 22: Brands in the Space
Healthy/ On-the- Brands in the Space Holistic Go Serving Size 21 g 56 g 28 g 28 g 28 g 21 g 21 g Calories 25 160 130 50 70 90 70 Total Fat 0.5 g 11 g 10 g 4g 1g 7g 6g 160 Sodium 85 mg 420 mg 350 mg 570 mg 415 mg 135 mg mg Protein 5g 13 g 8g 8g 11 g 5g 5g
Slide 23: 2015 Foodservice Growth Drivers
2015 Foodservice Growth Drivers Healthy/ Holistic Sector / Category % Chg Lbs. LY National Accounts 14% K-12 Schools 7% Street Business 6% Breakfast Category 15% Cooked Breast Category 9% Sliced Breast Category 5%
Slide 24: 2015 Turkey Takeovers
2015 Turkey Takeovers Student Dining Center Colorado State University, Fort Collins, CO Student Dining Center Colorado State University, Fort Collins, CO Completed 4/15
Slide 25: 2015 Turkey Takeovers Video
2015 Turkey Takeovers Video
Slide 26: Menu Maximizer
Menu Maximizer Healthy/ Holistic *The customer can select the protein that they are currently using on their menu
Slide 27: Partnerships
Partnerships Healthy/ Holistic Jalapeño Jack Turkey Burger LTO, 64 LOCATIONS, 2/10/15-4/30/15
Slide 28: Premium Position in Deli
Premium Position in Deli Healthy/ Holistic
Slide 29: Premium Deli Products
Premium Deli Products Initiatives 3-Yr CAGR • Premium deli 2013-15 • Branded distribution targets tied to retail tray pack Premium Behind 15.7% • Multi protein The Glass Sales Growth* • Project “One Look” with Hormel Foods Industry 3% • Local and national Sales Growth • Authentic grab & go *Estimate
Slide 30: Summary
Summary • Great first half • Retail dollar sales up 11% • Foodservice dollar sales up 11% • Deli dollar sales up 14% • Significant second half challenges due to avian influenza • Strong relationships • Experienced team
Slide 31: Jennie-O Turkey Store
fo ds fOr the wa Jennie-O Turkey Store @ Rye