Jennie-O Turkey Store is still underperforming as a result of poor turkey market conditions and two product recalls in 2018, but its parent company, Hormel Foods, is making efforts it believes will help Jennie-O regain lost distribution.
Hormel Foods on August 22 announced its financial results for the third quarter of fiscal year 2019. For the Jennie-O Turkey Store segment, the company reported a 4% year-over-year decline in volume, a 5% drop in net sales and a 9% decline in segment profit.
Speaking during a conference call, Hormel Foods CEO Jim Snee said the retail business continues to be impacted by lost distribution due to the impact of two voluntary product recalls. Both recalls were issued in late 2018 and were related to possible Salmonella Reading contamination in raw ground turkey products.
Segment profit, Snee added, declined as a result of lower sales from retail and foodservice value-added items.
However, Snee is optimistic Jennie-O Turkey will rebound with the company’s efforts to rejuvenate the segment. The company is “reactivating promotional activity to regain lost retail distribution,” he said, and it has also made some staffing changes.
“We expect the process of regaining distribution will go well into 2020. Over the last few months, we have made changes to the Jennie-O organization to bring in several experienced leaders from other parts of the company who are charged with restoring growth through new and old ideas for this business,” Snee said.
Impact of African swine fever
On several occasions during the conference call, Snee discussed the current African swine fever (ASF) outbreak and its impact on not only Hormel Foods’ pork business, but also on the greater animal protein industry.
When asked by one analyst if diminished pork supplies due to ASF losses will increase demand for turkey products, Snee said it is a “fair assumption” that it will.
“I do think there’s a point of view out there that says poultry products, and turkey in particular, could benefit,” said Snee. “We’ll see how that materializes the balance of this year and into 2020, but I think that’s a fair assumption.”
View our continuing coverage of the African swine fever outbreak.
