Meat + Poultry - October 2016 - 10

BUSINESS NOTES

HORMEL'S THREE AVENUES TO GROWTH
Three trends will drive sales growth for Austin, Minnesotabased Hormel Foods in the future: international
expansion, health and wellness and capitalizing on the
burgeoning market for on-the-go snack options. With
a solid foundation in the meat protein categories, the
company sees capitalizing on the three trends as a way of
diversifying its position in the marketplace.
" ... We acknowledge that
our portfolio is primarily a
domestic portfolio today,
but we believe that our
international segments will
continue to grow organically
through our continued
expansion in China, as well
as the growth in our iconic
brands like Spam and Skippy,"
said Jim Snee, president
and COO, during a Sept. 7
presentation at the Barclays
Global Consumer Staples
Conference. "And we will
continue to seek opportunities
to expand our global footprint
through acquisitions."
Snee pointed to such acquisitions as Justin's Specialty
Nut Butter, Applegate Farms, CytoSport Inc., and Wholly
Guacamole as well as the internally developed line of
Natural Choice products as examples of Hormel's focus on
products perceived as healthy.
Within snacking, the company is looking to capitalize
on two sub-categories: on-the-go and parties. Snee noted
the number of snacks consumed daily has doubled since
2010. "And Hormel's innovation machine has capitalized
on this trend with the launch of Rev Wraps in 2013," he
said. "This year, we're excited to be launching Rev Bites,
which is a follow-on innovation consisting of smaller bites
in flavors such as turkey, ham, and pepperoni."
While the snacking often is considered on an individual
basis, Hormel has done well with its party platters, Snee
said. "Snacking also takes place in households and during
impromptu parties," he said. "Hormel Gatherings party
trays meet the need for any get-together, and this meat,
cheese, and cracker tray has been doing incredibly well in
the marketplace. We're excited about the innovation that
we believe can continue to come in this space."
While diversifying Hormel's product line may lead to
additional growth, it also may insulate the company from
outside forces that may limit supply and affect earnings.
Both the pork and poultry industries have been hit hard
in the past few years by such diseases as PEDv and avian
influenza.

MEAT+ POULTRY | 10.16 | www.meatpoultry.com

"... The last several years have been indicative of some
of the risk factors," Snee said. "... So something like that in
the future certainly could mitigate our ability to hit the top
side of the business. But again, we need to focus on the
things that we can control, which is that balanced model,
which provide us nice offsets to those businesses."

BOB EVANS REPORTS IMPROVED Q1 EARNINGS
As a major shareholder continues to call for Bob Evans
Farms management to spin off the company's food
business, the company reported improved earnings during
the first quarter of fiscal 2017.
On Aug. 26, Sandell Asset Management, an investor
in New Albany, Ohio-based Bob Evans Farms, renewed
its call, initially made in 2013, for the company to be split
up. The investor said it did not believe the company's
stock price reflected the value associated with Bob
Evans' packaged foods business, BEF Foods Inc., the
manufacturing division that produces and distributes side
dishes and sausage products for the company's restaurants
as well as for retail customers.
On Aug. 31, during a conference call with financial
analysts, Saed Mohseni, president and CEO, iterated that
all options remain on the table.
" ... I think over the last seven months I've been
very, very clear that all options for Bob Evans are under
consideration by our board of directors," he said. "And I
believe that ultimately the board will make a decision that
is in the best interest of our shareholders and create value
for our shareholders."
For the quarter ended July 29, Bob Evans Farms
recorded net income of $9,162,000, equal to 46 cents per
share on the common stock, and an increase compared
with the same period of the previous year when the
company earned $4,280,000, or 19 cents per share.
Sales for the quarter fell to $306,317,000 from
$321,713,000 the previous year.
"BEF Foods began fiscal 2017 with continued strong
volume growth during the first quarter," Mohseni said.
"Additionally, BEF Foods achieved market share gains
in both its key side-dish and sausage product categories.
We have completed the expansion of our Lima, Ohio,
refrigerated side-dish plant and are now gearing up to
meet peak holiday production, which begins during
the back half of the second quarter. The Lima plant
expansion provides the added production capacity that is
critical to our ongoing efforts to gain additional points of
distribution, particularly in West Coast growth markets."
During the quarter, BEF Foods generated an operating
income of $15,387,000 on sales of $85,941,000. Operating
income for Bob Evans Restaurants totaled $11,602,000
during the quarter on sales of $220,376,000.

http://www.meatpoultry.com

Meat + Poultry - October 2016

Table of Contents for the Digital Edition of Meat + Poultry - October 2016