During its chat at the Bank of America 2024 Consumer & Retail Conference, Hormel Foods talked about the winning quarterly results it recently announced, driven by strong volume in all segments — which was unique for food companies this quarter — giving insights into several factors impacting the success story.
Jacinth Smiley, executive vice president and CFO, pointed to supply chain improvements and progress made on its transformation and modernization initiatives that also contributed to the results for Q1. Volume was strong even outside of retail and turkey, with international business coming in better than expected. In that segment, Hormel expected growth for full year 2024, but didn’t expect it so early. In terms of the broader environment in China, for example, there’s still some distribution gains being made, which has Hormel feeling good about where 2024 is headed.
Foodservice also saw growth, with Hormel positioned well to benefit from popularity in convenience stores. The company’s direct sales team continues to drive business with both commercial and non-commercial (colleges, institutions) customers, Mark Ourada, group vice president of foodservice, said.
Freight, warehousing decreases translated to lower inventory, and that had a positive impact on the bottom line. Mild weather in first quarter helped in November and December, and January weather impacts didn’t have a significant impact on the foodservice channels, Ourada explained.
The Covid-19 pandemic tended to blur some lines between what is a retail product versus a foodservice product, he added, but he didn’t think that gray area hurt Hormel — and in fact, may have helped the company in some ways. When you think about the changes made in convenience stores and their product mixes, not to mention supermarket service delis and the like, several Hormel products cross over what used to be traditional lines to fit in new homes.
Planters was presented as a great example of how the company is innovating and also cross-selling brands into new channels. Smiley said that the company had gotten off to a slow start unlocking the purchase value of Planters at first, but today, there is momentum building. She highlighted new product flavors, calling out the Planters Nut Duos Buffalo Cashews & Ranch Almonds as one item that has drawn a new, younger audience to the brand.
The company has invested in new lines at the plants to handle the new items, and shifted its advertising strategy away from investing in a Super Bowl ad to an “always on” advertising push focused on its “Ahhh, Nuts” theme, which has paid dividends, the company said. Also giving Planters a boost has been the decision to put the brand into foodservice, particularly in the convenience store environment, where Ourada says can create great quick-hit and repeat purchases from consumers.
Both Smiley and Ourada discussed the portfolio rationalization efforts underway
