Jim Splinter
Grocery Products
By Serving The New American Family
2
The Family Unit is Undergoing
a Fundamental Shift
3
Income Polarization
40% of households
60% of households
< $62K Per Year Household Income >
Generational Shifts
Ethnic Fragmentation
Generation Share of Population
World Economic Purchasing Power
(age in 2020)
(by 2015)
35%
30%
25%
HISPANIC
AMERICANS
20%
2010 Share
2020 Share
15%
10%
5%
12TH
LARGEST
ECONOMY
AFRICAN
AMERICAN
17TH
LARGEST
ECONOMY
ASIAN
AMERICAN
27TH
LARGEST
ECONOMY
0%
Seniors
(75+)
Boomers Gen X (39- Gen Y (18- Emerging
(56-74)
55)
38)
(<18)
Sources: U.S. Department of Commerce, Kantar Retail Analysis, and Nielsen 360 Conference 2012
4
Moms Today are
Informed, Connected and Inspired
5
Serving the New American Family
• Appealing to inspired, busy, health
conscious, and value conscious moms
• Products and packaging for smaller
families and multicultural families
• Connect consumers to products using
relevant, contextualized messages
• Engage consumers through correct mix
of communication mediums
6
7
Role of Protein Guides Innovation
Sustained
Energy
EMOTIONAL
Lean Tissue
Maintenance
No Guilt
PROTEIN
Mental
Focus
Success
Daily Protein Needs
56g
46g
Satiety
FUNCTIONAL
8
Strategic Acquisitions
2005
2009
2010
2011
2013
9
Key Performance Targets
Revenue Growth of 5%
Organic
Brand Building & Innovation
3% to 4%
+
Acquisition
Enabling & Bolt-On
2% to 3%
Operating Income Growth of 10%
10
Vision, Pillars & Strategic Imperatives
Grocery Products:
Leading in Protein-Strong
Convenient Foods
47% Share
Protect & Grow
38% Share
Invest & Grow
Innovation
Source: Nielsen XAOC 52 Week Ending 4/27/13
Brand
Equity
Channel
Development
4% Share
Expand
Cost & Margin
Leadership
16% Share
Integrate & Grow
Ethnic
Capabilities
Great
People
11
Dollar Market Share
-Microwave Meals38%
5%
Category Growth
24%
2012 - 2013
17%
$525 million
1%
Hormel Foods
Source: Nielsen XAOC 52 Week Ending 4/27/13
Campbell’s
ConAgra
Category
Private Label
12
Microwave Meals Growth Platform
Category Profile
• $525 million in sales
• Tray EQ. Baseline Growth of 8%
Hormel Foods MW Tray HHP Trend
% HHP
15
13.4
12.6
10
10.5
10.2
12.1
11.5
10.9
6.9
5
4.7
3.1
0
04
05
06
07
08
09
10
11
12
13
Year
New Items
Source: Nielsen XAOC 52 W/E 5/25/13
Brand Building
Household Penetration Growth
13
Focus is on category growth, meal occasion
expansion and diverse flavor options
Driving Brand Growth,
Elevating the Category
New Varieties:
• Scalloped Potatoes
• Cheesy Potatoes
• SPAM® and Macaroni
and Cheese
Category
Expansion
Key Strategies for Growth
New SPAM® Items
14
Vision, Pillars & Strategic Imperatives
Grocery Products:
Leading in Protein-Strong
Convenient Foods
47% Share
Protect & Grow
38% Share
Invest & Grow
Innovation
Source: Nielsen XAOC 52 Week Ending 4/27/13
Brand
Equity
Channel
Development
4% Share
Expand
Cost & Margin
Leadership
16% Share
Integrate & Grow
Ethnic
Capabilities
Great
People
15
Dollar Market Share
Dollar Market Share
-Luncheon Meat-
-Chili-
1%
5%
CAGR
CAGR
2011 - 2013
2011 - 2013
$524 million
Category
$224 million
Category
SPAM® brand
Hormel® Chili
Dollar Market Share
Dollar Market Share
-Hash-
-Stew-
-3%
5%
CAGR
CAGR
2011 - 2013
2011 - 2013
$100 million
Category
Mary
hash
Kitchen®
$90 million
Category
Dinty Moore® brand
16
Legacy Core Growth Platform
Category Profile
• $1.3 billion in sales
• 43% household penetration
Growth through innovation
Build brand equity
Target occasional users
New Items
Brand Building
Key Strategies for Growth
17
SPAM Goal: Activate Occasional Users
Listen
Talk
See
Believe
18
Marketing Investments
19
®
HORMEL
Re-Engage
Consumers
Category
Growth
Innovation
Chili Category +4%
35
30
Millions (Pounds)
Increase
Buy Rate w/
Occasionals
Chili
25
30.2
31.3
12.2
14.0
18.0
17.3
20
15
10
5
0
Data Source: Nielsen
Hormel® Chili +15%
2012
4 WKS End 2/4/12
Hormel Chili
2013
4 WKS End 2/2/13
A/O Chili
20
Vision, Pillars & Strategic Imperatives
Grocery Products:
Leading in Protein-Strong
Convenient Foods
47% Share
Protect & Grow
38% Share
Invest & Grow
Innovation
Source: Nielsen XAOC 52 Week Ending 4/27/13
Brand
Equity
Channel
Development
4% Share
Expand
Cost & Margin
Leadership
16% Share
Integrate & Grow
Ethnic
Capabilities
Great
People
21
Dollar Market Share
-Mexican Foods-
2.8%
14%
CAGR
11%
2011 - 2013
$9.9 billion
4%
Source: Nielsen XAOC 52 Week Ending 4/13/13
category
5%
2%
2%
Pepsico
Gruma
General Mills
Campbell’s
B&G
(Tostitos)
(Mission)
(Old El Paso)
(Pace)
(Ortega/Las Palmas)
22
Leading brand of salsa
and tortillasEastern United States
#1 Share of peppersWestern United States
Leading brand of salsa
and saucesWestern United States
Dairy/Deli
#1 Selling mole &
nopalitosUnited States
Leading brand
of authentic
salsa
Hispanic/Mexican
Leading hot sauce &
tomato sauce brandsMexico
Grocery
Frozen
Produce
Leading brand
C-store & Club
Channels
#1 GuacamoleUnited States
23
Innovation
Cooking Sauces: Roasted Pasilla
Chile, Tomatillo Verde, Red Guajillo
Chile, Traditional Chipotle
Mexican Snacking Destination Set
24
Innovation
Varieties:
• Egg, Bacon, Hash Browns, & Cheese
• Egg & Sausage
• Triple Play Breakfast
• Egg & Sausage Chimichangas
• Egg, Bacon, Cheese & Jalapeno
Varieties:
• Mini Chicken and Beef Tacos
• Grilled Chicken Quesadilla
• Chipotle Chicken & Cheese Flautas
• Taquitos
• Fajita Bites
25
Innovation
26
Vision, Pillars & Strategic Imperatives
Grocery Products:
Leading in Protein-Strong
Convenient Foods
47% Share
Protect & Grow
38% Share
Invest & Grow
Innovation
Source: Nielsen XAOC 52 Week Ending 4/27/13
Brand
Equity
Channel
Development
4% Share
Expand
Cost & Margin
Leadership
16% Share
Integrate & Grow
Ethnic
Capabilities
Great
People
27
Strategic Fit of
®
SKIPPY
• Growing value-added non-meat protein
• Adds earnings stability/margin accretion
• Extendibility into other on-trend categories
• Relatively easy to integrate and manage
• Fit to current “protein” portfolio
•
#2
brand position and the #1 share in “natural”
• Levers center store core competency
28
Strong Business Fundamentals
U.S. Peanut Butter $
Category Growth
U.S. Peanut Butter Equivalent Units
Category Growth
+ 30.4%
in billions
equivalent
units
in millions
+ 3.3%
+ 4.5%
Growth:
57.2
+ 1.0%
Growth:
$2.0
$1.6
56.6
$1.4
55.4
+ 2.3%
8.6
+ +8.6%
$1.5
53.0
2009
2010
2011
Latest
52 Weeks
Source: AC Nielsen. $ and EQ Volume Share is TTL U.S. All Outlets, 2009 Annuals–52 weeks ending September 29, 2012
2009
2010
2011
Latest
52 Weeks
29
Growing Consumption Trends
Annual Peanut Butter Eating
Occasions in the U.S.
Peanut Butter Sandwich
Usage is Very Stable
Per capita
30
Peanut Butter
28
28
27
27
27
2009
2010
25
2005
2006
2007
2008
2011
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 5’12
Years 1984 - 2012
Source: The NPD Group’s National Eating Trends Service, 2011
30
U.S. Peanut Crop Dynamics
PEANUT PRODUCTION (billions of lbs.)
Market is returning to historical norms after
2011/2012 aberration
HISTORIC
HISTORICPEANUT
PEANUTPRICES
PRICES– –FOB
FOBSHELLING
SHELLINGPLANT
PLANT
6.10
3.70
2009A
Average Price
$0.47
$1.08
4.20
3.70
2010A
2011A
2012E
Source: National Agricultural Statistics Service (NASS), Agricultural Statistics Board, USDA, August 3, 2012.
Current
Market
$0.50 - $0.55
31
FUN
Embody the sheer joy
of being a kid
HEALTH-CONSCIOUS
Focus on healthy lifestyles
and kid nutrition
ICONIC
Stay relevant in pop
culture
FORWARD-THINKING
Offer on-trend variants,
such as Naturals
FAMILY-ORIENTED
Know our consumer and
what is important to them
TASTE-DRIVEN
Recognize that taste is king
in the foods business
ENTREPRENEURIAL
Seek to win differently
$
32
Our innovation approach to spreads will follow a
process similar to our MegaMex Foods JV
33
The End
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