Hormel Foods Corporation · NYSE:HRL
Hormel Foods — Investor Day (June 2013)
54 slides from Hormel Foods's investor day presentation, Jun 25, 2013
Slide 1: Glenn Leitch
Glenn Leitch President, Jennie-O Turkey Store Group Vice President, Hormel Foods
Slide 2: Agenda
Agenda • Industry status • Our fundamental goals • How we win • Our supply chain metrics • Summary 2
Slide 3: 2013 Turkey Industry Ranking - Top 10
2013 Turkey Industry Ranking - Top 10 Rank Company 2013 Turkey Industry Ranking 2011 Pounds 2012 Pounds 2012 % Change 2013 Pounds 2013 % Change 1 Butterball, LLC 1,300.0 1,300.0 1,300.0 2 Jennie-O Turkey Store 1,290.0 1,275.0 -1.2% 1,250.0 -2.0% 3 Cargill Value Added Meats 1,095.0 1,095.0 1,071.0 -2
Slide 4: Fresh Breast Meat
Fresh Breast Meat NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT F11 2.52 2.75 2.65 2.41 2.25 2.40 2.48 2.50 2.50 2.50 2.55 2.67 2.67 F12 2.16 2.69 2.58 2.32 2.09 2.08 2.00 1.92 1.84 1.82 2.06 2.26 2.28 F13 2.11 2.05 1.95 1.68 1.60 1.56 1.55 1.55
Slide 5: Frozen Thigh Meat
Frozen Thigh Meat NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT F11 1.34 1.32 1.32 1.32 1.32 1.33 1.35 1.35 1.35 1.35 1.35 1.35 1.40 F12 1.24 1.47 1.47 1.47 1.47 1.42 1.31 1.07 0.90 0.88 1.03 1.12 1.25 F13 1.41 1.42 1.39 1.28 1.18 1.16 1.10 1.08
Slide 6: Cold Storage Stocks – Whole Birds
Cold Storage Stocks Whole Birds 350 300 250 200 150 MM Lbs 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 2012 2013
Slide 7: Cold Storage Stocks – Parts and Other
Cold Storage Stocks Parts and Other 300 OtherBreast Meat 250 200 150 MM Lbs 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 2012 2013
Slide 8: Total Live Weight Slaughter Pounds
Total Live Weight Slaughter Pounds 750 700 650 600 MM lbs 550 500 450 2011 2012 2013 2013 live weight slaughter +2%
Slide 9: Monthly % Change in Slaughter Pounds
Monthly % Change in Slaughter Pounds (Measured year-over-year with comparable number of kill days.) 10 8 6 4 2 % 0 -2 -4 -6 -8 2010 2011 2012 2013
Slide 10: Average Live Weight Per Head
Average Live Weight Per Head 32 31.5 31 30.5 30 lbs/bird 29.5 29 28.5 28 27.5 27 2011 2012 2013
Slide 11: Weekly Egg Sets
Weekly Egg Sets 8 7.5 7 MM Eggs 6.5 6 5.5 5 4-Jan 8-Feb 14-Mar 18-Apr 23-May 25-Jun 30-Jul 3-Sep 8-Oct 12-Nov 17-Dec 2011 2012 2013
Slide 12: Poults Placed (U.B.)
Poults Placed (U.B.) 16 12 % Inc/Dec 8 Yr over Yr 4 0 -4 -8 -12 -16 2011 2012 2013
Slide 13: Corn Market
BUILDING TRADITION Corn Market Long Term Nearby Corn Futures [St ilay-2073 F © C2013K ‘850°0 La-699°4 H-703'2 | 800° 0 L-698'4 ‘O-700°2 | 750°0 NC-2°0 © MOV[C@C,60]- 554° 7 & MOV[C@C,120)- 425° 4
Slide 14: At the end of the day, grain markets will not define us
At the end of the day, grain markets will not define us. We will be defined by… • Maintaining the level of Food Safety at a standard that leads the industry. • Developing People Safety and Animal Care practices such that we watch out for each other and the animals in our care every day. • Managing o
Slide 15: How We Win in the Marketplace
How We Win in the Marketplace
Slide 16: Ground Turkey Category Leadership
Volume Sales JENNIE-O® Ground Turkey Products Ground Turkey 2-Year Category Growth + 34% Leadership 2010 2011 2012 Volume Share JENNIE-O® has grown 34% since PERDUE, 6% FOSTER FARMS, 4% 2010, and now has 36% market BUTTERBALL, 6% share. JENNIE-O, 36% PRIVATE LABEL, 12% HONEYSUCKLE, 14% SHADYBROOK, 1
Slide 17: Do we win the marketplace?
Total Brand Shares of Fresh, Frozen & Processed Turkey Categories Do we win the marketplace? Other, 21% JOTS, 35% Foster Farms, 4% Private Label, 9% Cargill, 20% Perdue, 3% Butterball, 7%
Slide 18: Customer Service
Key Customer Service Metrics 100.0% 99.0% 98.0% 97.0% Customer Service 96.0% 95.0% 94.0% 93.0% Case Fill Order Fill On Time 2009 2010 2011 2012 From 2009 to 2012, Jennie-O Turkey Store’s Customer Retention Rate for Fresh Tray Pack customers is 98%.
Slide 19: Logistics “The Fresh Super Highway”
Logistics “The Fresh Super Highway” Jennie-O’s fresh distribution system remains as a core competency of the company.
Slide 20: Innovation
Package Shelf Life Convenience Innovation Non-traditional Channels New Ideas Merchandising
Slide 21: Brand Building
LIKES on Facebook page. Brand Building Annual visitors to jennieo.com JENNIE-O® uses a multi-prong Consumer impressions from public relations approach to reaching consumers - from social media to public relations, from grassroots level Estimated viewers of the 2012 WORLD SERIES® sampling to national
Slide 22: Purchase Intent
Total Purchase Intent JENNIE-O® Brand 100 90 80 70 60 Purchase Intent 50 40 30 20 10 0 2009 2011 Purchase Intent Brand Awareness As JENNIE-O® brand awareness has grown, so has intent to purchase. This key sales-driving measurement is up from 26% to 53%.
Slide 23: Category Leadership
Household Penetration (%) Category JENNIE-O® Tray Pack Products Leadership 9.0 9.7 8.1 7.2 7.2 Jennie-O Turkey Store has grown 6.4 brand and category consumption by driving tray pack new household penetration 51% since 2007. 2007 2008 2009 2010 2011 2012 Source: AC Nielsen, 52 w/e 11-10-12
Slide 24: Food Safety Brand Communication
Food Safety Brand Communication Striving for the safest cooking possible, Jennie-O communicates food safety to our consumers in a variety of ways – including messages on our websites, packaging and TV commercials.
Slide 25: Key Growth Drivers – Fresh Breakfast Chubs
Key Growth Drivers – Fresh Breakfast Chubs • Projected to generate millions of pounds of new volume in FY 2013 • Benefitting from extended shelf life and solid momentum for turkey based breakfast meats • Over 40 customers now purchasing regularly 2012Q02 2012Q03 2012Q04 2013Q01 2013Q02 25
Slide 26: Key Growth Drivers – Fresh Ground Chubs
Key Growth Drivers – Fresh Ground Chubs An Ownable Position: • Shelf life has improved. • Sales rates continue to grow. • Ground beef pricing inflation continues. • Dinner chubs increase the total turkey grind category. 2009 2010 2011 2012 2013 26
Slide 27: Key Growth Drivers – Turkey Bacon
2012-P01-W1 2012-P01-W5 2012-P02-W4 2012-P03-W4 2012-P04-W4 2012-P05-W3 2012-P06-W3 2012-P07-W3 2012-P08-W2 2012-P09-W2 2012-P10-W2 2012-P11-W1 Weekly Bacon Volume Trends 2012-P12-W1 2013-P01-W1 2013-P01-W5 2013-P02-W4 2013-P03-W4 2013-P04-W4 2013-P05-W3 2013-P06-W3 2013-P07-W3 Dollar Share +3 ACN 1
Slide 28: Building on Tradition
BUILDING on CD) TRADITION
Slide 29: Breakfast Results
Breakfast Results Bacon • LBs: 142 Index vs YAGO Fresh Breakfast Sausage • Fastest start of any new product
Slide 30: Promotional Periods
Promotional Periods Breakfast January – March, September - October Grilling April– August Oven Ready September– December
Slide 31: JENNIE-O and WHOLLY GUACAMOLE Joint Promotion
® JENNIE-O and WHOLLY GUACAMOLE® Joint Promotion Custom All*You Jennie-O® Recipe on Newsletter Social jennieo.com All*You Presence Magazine Ad and Coupon 682 page views 350,000 opt-in subscribers (0.12% of all page views) 1.5 M circulation, 3.6 M impressions 19.3% click thru rate Coupon Redemption F
Slide 32: New Product Launches
New Product Launches Launched : 2011 Launched : 2012 Launched : 2012 Launched : 2013 Launched : 2013 Launched : 2013 Fresh Turkey Breakfast FESTIVE Seasoned Turkey Jalapeno Jack 8oz Turkey Franks Turkey Breast Steaks Maple Turkey Bacon Sausage (Chubs) Chubs Turkey Burgers Launched : 2011 Launched :
Slide 33: Foodservice
BUILDING @D) TRADITION Foodservice This burger means business.
Slide 34: Historical Look – Net Sales Growth
Historical Look – Net Sales Growth 2009 2010 2011 2012 2013e Consistent 12% Annual Growth
Slide 35: Balanced Sales Mix
Balanced Sales Mix Military/Other 6% National 13% GPO 26% Schools 20% Independent 25% Correctional 10%
Slide 36: Turkey Bacon
Turkey Bacon lbs Net Sales 2010 2011 2012 2013e • Leverage JENNIE-O® Brand Retail strength and marketing dollars • Capitalizing on breakfast growth in Food Service • “Crispy” expertise 36
Slide 37: A Sample of 2013 Customer Successes
A Sample of 2013 Customer Successes Major sandwich chain volume up 58% Sit down breakfast new bacon item Regional chain all natural burger Major K-12 L’atitudes contract 3 all natural products at a specialty retailer
Slide 38: LAUSD kids get smarter foods
LAUSD kids get sm arter foods,
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Slide 40: “Store Baked” Program
“Store Baked” Program • Part of a 3-Tiered program • Easy (raw roasts) • Easier (brown to finish) • Easiest (FC premium roasts) • Benefits • Unique to each retailer and customer • Can be sold in any deli (even those with exclusive brand agreements) • Minimal labor at deli • Differentiates from Meat
Slide 41: Rotisserie Hot Entrées
Rotisserie Hot Entrées • Split breasts • Turkey pot roast
Slide 42: Deli Brand Distribution – Total US
Deli Brand Distribution-Total US Deli Bulk Total Turkey ACV 82.0% % ACV Selling 51.1% 47.6% 35.4% 23.6% 20.5% 10.1% 9.8% 7.3% 6.4% PRIVATE LABEL Jennie-O Sara Lee Butterball Eckrich Boar's Head Carolina Turkey Dietz & Watson Healthy Ones Perdue Turkey Store Source: Perishables Group 13 w/e 2/23/13,
Slide 43: Whole Bird Business
Whole Bird Business 43
Slide 44: Effective Cost Reductions
Effective Cost Reductions Plant Process flow, product handling, and automation Farms Product Natural selection, feed Yield performance, profile, and farm sizing, packaging improvements (natural gas) Cost Reduction $$ 44
Slide 45: Value Adding the Hen Mix
Value Adding the Hen Mix GP/CWT OR Whole Bird Smkd Whl Bird Split Breast Hen Whole Tky 45
Slide 46: Tactics to Reach Consumers
Tactics to Reach Consumers 46
Slide 47: Growing New Export Markets
Growing New Export Markets: Mexico, Canada, and China/HK still lead the way, but…. 5 4 3 $ millions 2 1 0 Mid East Columbia Iraq West Africa 2010 2013 • Reduces pressure on domestic price/supply relationship • Focuses on improving by-product values, sometimes extraordinarily so • Improves long term
Slide 48: Employee Count
Employee Count 5,876 5,580 5,436 5,317 5,240 5,241 5,233 5,193 4,948 4,930 5,001 4,852 4,775 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 49: Cost Neutral
Cost Neutral Labor Cost / lb Overhead Cost / lb Evis/Bone VA Evis/Bone VA 2012 YE 2013 YTD 2012 YE 2013 YTD
Slide 50: Recordable Accident Rate
Recordable Accident Rate 20 Recordable Rate 15 10 5 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 YTD 50
Slide 51: Sustainability Goals
Sustainability Goals WATER USAGE Gal/lb FY 2013 1st Quarter 2006 2007 2008 2009 2010 2011 2012 2013 % Change Benson Ave. 0.62 0.51 0.5 0.45 0.39 0.35 0.36 0.36 0 WCT 1.34 1.15 0.95 0.78 0.69 0.73 0.73 0.66 10 Melrose 1.17 1.15 1.12 1.15 1.09 1.11 1.06 0.97 8 WAP 0.94 0.91 0.91 0.82 0.81 0.79 0.73 0.
Slide 52: Animal Care
Animal Care • Video review of loading • Audits at unloading • Extensive training • Industry best practices • Tell our story 52
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Slide 54: How We Win in the Marketplace…
How We Win in the Marketplace…