I’ve had a number of conversations regarding the outbreak of African swine fever (ASF) in China and its possible impact on the supply, demand and price of pork, as well as competing proteins like chicken, turkey and beef.
I’ve also had numerous discussions about ASF’s potential on grain markets, specifically on key feed ingredients like corn and soybeans.
Yet, after months of ASF being a hot topic, I never until today heard anybody ask how the disease outbreak will affect the price and popularity of Spam. Granted, Spam is a pork-based product, but let’s face it, when someone says, “let’s have pork for supper,” you don’t walk over to the kitchen cupboard and reach for a can of Spam.
Spam, for all intents and purposes, is its own food category. After all, how many meat-based foods could sell out of a limited edition rollout of a pumpkin spice flavored product within a matter of hours?
Hormel Foods, the parent company of Spam, held its earnings call for the fourth quarter of fiscal year 2019 on November 26. During that call, Hormel Chief Executive Officer Jim Snee and Chief Financial Officer Jim Sheehan on several occasions mentioned potential impacts of the ASF outbreak.
Also, during the course of the call, Snee spoke of how well sales of Spam have been going, not only in the United States, but also in China.
When it came to the question-and-answer portion of the call, one analyst had to tie the two subjects together.
So will the price of Spam go up?
“At a high level of ASF, we fully understand the scenario that results in higher prices. We talked a lot about our ability to price in the event that we see a larger scale or bigger impact ASF event, whether that’s domestically or in our business in China,” said Snee. “The Spam brand is a brand that has probably some of our strongest pricing power.”
Snee said Hormel Foods did take Spam pricing this year, partially based on the buildup of expenses over time. But he added that if ASF causes significant market effects, another price adjustment could occur.
“We do have a scenario modeled if we have to take pricing (up) again, we are positioned to do that,” he said. “We are closely watching the fundamentals of supply and demand, and if we need to take pricing, we’ll do that.”