Announced in August and implemented at the end of October, Hormel’s new operating model dissolves Jennie-O Turkey Store as one of four operating units, and integrates it into its three new segments. In a business update early last week, Hormel’s Jacinth Smiley talked about what that means.
“This is a major change in terms of how we manage our turkey business,” and is expected to save Hormel $20 million to $30 million a year, Smiley, Hormel’s executive vice president and chief financial officer, told analysts during a Feb. 28 conference call.
What once was Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, International and Other now fall under the headings of Retail, Foodservice and International, with Jennie-O mixed into all three.
Retail
The sector represents about $8 billion in net sales or 64% of Hormel’s total net revenue, and houses brands including SPAM, Applegate, Hormel, Black Label, Columbus and Jennie-O.
The business will be managed in six consumer verticals. That includes convenient meals and proteins, which account for about 25% of sales, while snacking — which includes Columbus and Hormel Pepperoni — bring in another 20%.
Global flavors and bacon — raw, fully cooked, microwave, toppings and turkey bacon products — each represent 10% of sales, and Hormel’s Applegate business of natural and organic meats and chicken account for 5%.
Value-added meats represent 30% of Hormel’s retail sales, and includes the majority of the Jennie-O Turkey Store retail business.
Foodservice
Catering to foodservice operators across the country, the segment brings in approximately $3.7 billion or 30% of the company’s sales, and combines entities including Jennie-O Foodservice, the Hormel Foodservice and Heritage Premium Meals.
International
The sector represented accounted for fiscal 2022 net sales of approximately $800 million, or 6% of sales. The segment is now responsible for all commodity export sales, including pork and turkey, Smiley said.
