How Hormel Foods Keeps Innovating

Chances are good anyone who has eaten a pizza in the past few months has tasted toppings created by the roughly 500 employees at Hormel Foods’ Burke subsidiary in Nevada, Iowa. To cope with increased demand from retailers and foodservice operators, Hormel in December doubled the size of an existing 210,000-sq.-ft. facility and added 210 new workers. A week later in Papillion, Nebraska, Hormel’s Papillion Food division opened a 535,000-sq.-ft. facility dedicated to the manufacture of Columbus and Hormel brand meat products that expects to employ 350 people during its first year of operation.

The significant capacity increases preceded recent personnel moves involving executives who oversee a complex supply chain of more than 30 production facilities and network of co-packing partners. Mark Coffey was named group vice president of supply chain and Jen Ehresmann was named vice president of supply chain. The Hormel veterans assume responsibilities previously held by Glenn Leitch who plans to retire during the second calendar quarter.

The changes are notable as the $9.6 billion company pursues an intertwined strategy of product innovation and ambitious environmental and sustainability goals under an initiative called 20 by 30 while also navigating through a dynamic consumer environment.

“We frequently talk about the strength of our iconic brands and at no time in this company's history have brands mattered more,” Jim Snee, Hormel’s chairman, president and CEO, told investors in January during the company’s virtual annual meeting. “Through our outstanding marketing, brand and sales teams, our brands holding #1 or #2 position in over 40 categories. And this year, we invested over $120 million to advertise and support our brands in the marketplace.”

Since the pandemic, Snee said Hormel brands and products were introduced to more than 2 million households. The company’s research also showed that the new consumers made repeat purchases.

“In fact, over 87% of all new consumers made a repeat purchase during the pandemic and over 75% of these new consumers made two or more purchases,” Snee said. “We delivered strong double-digit growth in our retail brands, which led to share gains in many of the categories we compete in. Not only were our core brands highly successful in 2020, we also delivered some of our best innovation throughout the year.”

The innovation happening at Hormel today is the result of work begun years earlier when Hormel established an innovation function and internal center of excellence, which is currently under the leadership of Scott Aakre, a 30-year Hormel veteran who has served as vice president of consumer insights and corporate innovation since 2011. Hormel is also investing heavily in digital marketing and e-commerce operations under the mantle of innovation, late last year the company promoted Leslie Lee, a 20-year veteran of CPG digital marketing, to vice president of digital experience.

As Snee noted, “we met our 15% innovation goal and delivered exciting new items such as Skippy peanut butter squeeze packs, Hormel Cup N' Crisp Pepperoni, Herdez, Salsa Cremosas, and Happy Little Plants, plant-based pepperoni for foodservice among more than a dozen other products, all delivered without interruption.”

According to Aakre, developing innovation requires listening to and observing consumers.

“We have a consumer advisory panel that we rely on to gain insight into the food centerpieces of specific events. For example, at Thanksgiving we knew that 80% of consumers were still planning on having a turkey on the table. We knew that Christmas was going to be an event where people would lean more into heritage and traditions and that would entail a main dish that was likely to be different from turkey,” Aakre said. “Hormel also has a cultural anthropologist on staff whose work is a source of a lot of great insights.”

One of the insights relates to the ongoing trend of convenience and how that is brought to life with products whether in a foodservice or retail environments. For example, Aakre noted that foodservice operators are better positioned now and have been able to address operational challenges through increased use of pre-cooked offerings.

“Convenience comes in products that may be smaller portions or oven ready. Pre-sliced hams are a good example. Our entire retail foodservice portfolio is designed to help grocers provide convenience,” Aakre said. “It also helps that in our foodservice portfolio, we are working with delis, retail and foodservice so we are able to take advantage of opportunities to drive innovation and best practice sharing across the segments. Our culture of innovation and portfolio of brands ensures we are ready to meet rapidly changing consumer demands.”