Hormel Foods Chief Financial Officer Jacinth Smiley explained ways its Jennie-O Turkey Store subsidiary will be absorbed into other Hormel Foods business segments during a special presentation February 28.
For more than a year, Hormel Foods has spoken of how in integrating Jennie-O into its other business functions – such as supply chain, selling organization and marketing team, and research and development teams -- it could save the company $20 million to $30 million annually.
That integration is part of Hormel’s GoFWD (pronounced “go forward”) initiative, which was implemented on October 31, 2022, the first day of the 2023 fiscal year.
“GoFWD is the next step in our evolution as a global branded food company. Said simply, this initiative better aligns our structure with our strategy,” Smiley said.
New business segments and how Jennie-O fits in
Previously, Hormel operated four separate “legacy” business segments, Smiley explained - Grocery Products, Refrigerated Foods, Jennie-O Turkey Store and International & Other. But under GoFWD, the company now operates three segments. Those are Retail, Foodservice and International.
Smiley said Jennie-O Turkey Store will be a part of all three segments. Jennie-O Turkey Store products will be sold through retail and foodservice channels, while also contributing to the overall performance of the International segment through exports.
The Retail segment
The Retail segment represents about 64% of Hormel’s total company revenue, anchored by brands including Jennie-O Turkey Store.
“We expect long-term benefits to our retail business from the sale which we will achieve by combining all our brands on one single management team and direct selling organization,” she said. “The segment is directly aligned to three of our strategic priorities: protect and grow our core brands; amplify scaling, snacking and entertaining; and enhanced growth of our ethnic and food-forward portfolios.”
Smiley said under the new structure, the Retail business will be managed in six focused “verticals.” Those are:
- Convenient meals and proteins
- Snacking and entertaining
- Global flavors
- Bacon
- Emerging brands
- Value-added meats
Smiley specifically identified a role for Jennie-O within the bacon and value-added meats verticals, which respectfully account for 10% and 30% of Hormel’s total Retail segment sales.
“The value-added meat vertical … is expected to help drive growth across the meat and deli case with value-added, seasonal and commodity solutions. It also helps optimize the use of raw materials across the organization.
Foodservice segment
The new Foodservice segment aligns directly with Hormel’s priority to expand leadership in foodservice, said Smiley, and accounts for about 30% of the company’s total net sales.
“This segment combines the Hormel Foodservice, Jennie-O Foodservice, Burke, Heritage Preemium Meats and and Hormel health labs business,” Smiley said.
International segment
The International segment accounts for about 6% of total company sales. Jennie-O’s role in this segment is largely attributed to the export of Jennie-O products, but Smiley added “the segment is now responsible for all commodity export sales including pork and turkey.”
Release of financial results
With the first full quarter under the GoFWD initiative completed. Hormel Foods will release the financial results of the first quarter of fiscal year 2023 on March 2.
