Hormel Foods continues to thrive in a tough marketplace through its commitment to innovate and renovate products and processes that, in the end, give the consumers what they want.

In today’s business world, there is no doubt that stagnation often is the death knell for companies headed down the path to ultimate failure. Innovation is the lifeblood of success — innovation that produces both creative, new products or ultra-efficient technology and processes.

In the meat- and poultry-processing industries, no one has done a better job bolstering its own success through widespread innovation in recent years than Austin, Minn.-based Hormel Foods. Hormel’s family of brands has grown almost synonymous with new product success: From SPAM Singles to Natural Choice products to Oven Ready products, Hormel has wowed consumers year in and year out.

Furthermore, the Hormel Natural Choice product line champions a technology that many believe has revolutionized food safety in the meat industry — high-pressure pasteurization — a technology that Hormel perfected and has pioneered.

Today, Hormel beams as its latest success story — its Compleats line of microwaveable meals — demonstrates the company’s ability to not only innovate, but also renovate a product line to add some pizzazz and make it more relevant.

Based on this unparalleled success in the area of innovation, Hormel stands above the rest as The National Provisioner’s 2008 Processor of the Year.

A Compleats overhaul

How successful has the Compleats line, relaunched in 2007 under its new banner, been? Simply put, Hormel has run out of room to meet production demands and is building a brand new plant dedicated to this product in Dubuque, Iowa, slated to open in 2009. Within the last year, Hormel has had “one of those fun challenges,” as chairman and CEO Jeffrey M. Ettinger calls it, trying to keep up with the production demand for the line as its success swelled.

The Hormel Compleats line isn’t a new product — it’s an example of how Hormel has modified its innovation stance to analyze and renovate existing product lines where and when needed. The product known as Hormel Compleats today goes back 22 years, when Hormel’s Top Shelf microwaveable tray products were born. The line offered eight

varieties across several food segments, including meat, chicken, seafood and pasta.

In the 1990s, Dinty Moore® American Classics, a microwave tray product line that was fully enclosed in a cardboard box, replaced Top Shelf. The new line, however, swapped out the plastic lid of past iterations for a flexible lid stock. According to Ettinger, something was holding the line back.

“One of the things we found from consumers that was a potential long-term sticking point was having an easy-to-remember, grocery-list name for the product,” he says. “So the team set out to figure out if we could create a sub-brand that would be easy to remember and that would kind of help capture the essence of the product.”

Hormel Compleats was the catchy, on-point name that was launched earlier this decade to replace the Dinty Moore American Classics flag.

“It communicates the notion that, especially for a lunch occasion, this tray is typically a complete meal, as opposed to a cup of soup, that you’d need to have a sandwich with to make it a complete meal,” Ettinger says.

But the main change to the line, from a technical standpoint, was not in the product formulation or mix — it was a packaging change that set off the firestorm of success.

“The big change occurred in the early part of this decade, when we took the product out of the box and allowed consumers to really see what they were buying — that it was, in essence, an ‘unfrozen, frozen entrée,’” Ettinger explains. “Taking it out of the box and putting it in a sleeve was consumer-research driven. … It was one of a number of options we had looked at, and it connected well with consumers.”

That change also has helped Hormel be more environmentally friendly, an excellent side effect to a change made for consumer-driven reasons, Ettinger continues.

“As the whole world becomes more and more focused on sustainability, it’s turned out to have been beneficial in that regard as well,” he adds. “We sell more than 100 million units of this item, so that’s 100 million fewer boxes out in the marketplace needing to be recycled.”

In response to the increased demand that followed the Compleats overhaul, Hormel added two production lines in its Rochelle, Ill., plant, refurbished and added a line in the Beloit, Wis., plant, and added a brand new line in its Atlanta plant — all to keep up with Compleats’ popularity.

“[Then,] we kind of ran out of add-on opportunities,” Ettinger explains, “and as we looked forward with the product line, we recognized that this time we were going to have to build a plant from scratch — get ahead of the demand and build a facility oriented toward it.”

Construction on the Dubuque facility is slated to begin this year, with a targeted opening date of November 2009. At an expected cost of $89 million, the 327,000-square-foot plant will focus entirely on pumping out Compleats, and it demonstrates true dedication to the line by Hormel.

“It also allows us to make the [product] line as flexible as possible,” Ettinger adds. “If, for example, in the future, there are different sizes of the trays or multi-component trays, this facility would be in a better position to take advantage of those types of opportunities.”

Furthermore, Ettinger says, Hormel expects to retain the services of the lines producing Compleats currently — that the Dubuque plant will simply add on to the growth of the product. Indeed, in May, Hormel announced its second-quarter results, in which Ettinger announced that the company’s Grocery Products segment “delivered higher than expected sales and earnings, aided by strong sales of the SPAM family of products and continued growth of the Hormel Compleats product line.”

That segment showed an operating profit increase of 6 percent and a dollar sales increase of 4 percent in the second quarter. As more retailers jump on the Compleats bandwagon, consumers should not be surprised as the options grow at their local supermarkets.

“Consumers should see a significant uptick in the embracing of the product line by a broader array of retailers,” Ettinger says. “The more variety retailers offered, typically, we’ve found that the more each item would sell, because it would just be a more noticeable section and consumers could put four varieties in their basket instead of one or two.”

Further growth of the entire line is expected to come from Hormel’s newest varieties — Compleats “Green Label” options (as they are called in-house at Hormel), for the more health-conscious consumer. Ettinger says these Green Label products were in about 30 percent of U.S. grocery stores at presstime, but that the product was gaining acceptance based on the demand for health-conscious items.

“There were occasional consumers [of the product] who looked at the original line and … may have said, ‘Boy, if I could feel more comfortable that this is hitting some of the nutrient aspects of a product that I’m looking for, it’d be a product I’d buy more often,’” he says. “So these products were designed to meet the USDA’s definition for a healthy product — they’re controlled in terms of sodium, low fat, high in protein, high in fiber and the calories are controlled.”

Hormel considers the original, “Red Label” products to be healthful, complete meals, but the difference is, those varieties aren’t held to the same USDA health standards as the Green Label items. Still, Hormel is striving to make these varieties better, Ettinger says, without sacrificing the flavor of the product. It was important, he adds, that the Green Label items didn’t sacrifice taste either, so the company took a slightly different approach in research and development of the items.

“We really allowed our R&D group the freedom to design the products from scratch, knowing what the requirements were first,” he says. “So we didn’t tell them, ‘OK, here are the varieties we want, now make a low-fat, low-sodium version of it.’

“It was, instead, ‘Find what kind of recipes would lend themselves to meeting these requirements, then you provide us with some options that we can take to consumers.’”

Innovation invasion

It should be plain as day to anyone who walks in the door at Hormel that innovation is central to the company, and Ettinger believes it is more important today in a business environment filling with heavy competition and ever-changing consumer needs.

Prior to The National Provisioner’s last visit to Hormel Foods (January 2007 issue), the company had introduced the Billion Dollar Challenge, in which the company strived to hit $1 billion in sales of products introduced in this decade by 2009.

Well, Hormel blew that challenge out of the water, meeting the goal two years early. The next challenge? Secure another $1 billion in sales of those same products plus any other new products rolled out by 2012 — $2B by 2012. However, Ettinger says it goes beyond goal-setting.

“We need to not just talk it, we need to support it,” he adds. “We made a major expansion to our Austin-based R&D center to give us much more significant pilot plant capabilities in that facility. … Jennie-O Turkey Store was able to build a small pilot plant facility focused on value-added items made from turkey right there in Willmar, which has been a great assist to that facility continuing to grow well.”

A major part of any target Hormel sets its sights on is its international business, a segment that recently closed the second quarter with double-digit increases in dollar sales and earnings, according to a company release. Hormel has certainly been involved in exporting products, Ettinger says, but the company’s efforts in Asia, particularly China, have been truly focused on in-country production rather than importing products. To that end, Hormel announced earlier this year the opening of a new Innovation Center in Shanghai, China.

“The building of the Innovation Center really is intended to be an indication of the support we have for that market — our intention to continue growing there — and it’s a real-life, get-it-done, bring-your-customers-in, in-country facility,” Ettinger explains. “Instead of relying on things going all the way back to the U.S. and Austin, and then back and forth, this allows them to react much more quickly. It really should help us leapfrog our growth.”

Hormel has been able to create a great reputation, Ettinger says, by balancing the Western styles, flavors and food presentations with the traditional Chinese elements. Introducing the Chinese people to the new products often has been a learning process for Hormel.

Ettinger explains that Hormel’s experience trying to sell hot dogs in Asian markets is a perfect example. When Hormel first introduced hot dogs to the Chinese consumers, they were alien products to them.

“We’d try to sell a hot dog in more of a traditional Western way — in a bun with mustard,” he says. “People would look at it askance, wonder what it was and wouldn’t be very receptive toward it.”

Soon after, Hormel altered its presentation and delivery, by blending East and West cultures and ideas about food.

“We then created a television commercial that depicted slicing hot dogs and cooking them up in a wok, serving them with rice and things that would be more familiar to the audience in the market.”

Ettinger says hot dogs, as well as other Western-style food items, have been much better accepted in China, particularly among those consumers who are actively seeking out new, Western-style experiences in their daily lives. Ettinger expects that growth in China will be a big part of the company’s future, and that the Innovation Center there should position the company, which has 10 years in the market already, as a stronger brand in the meat business for years to come.

It’s that sort of ability to think ahead of the curve and meet consumers’ needs as they grow that has kept Hormel Foods at the top of its game for many decades. And it has given other companies in the industry a fantastic example for when looking for ways to get their own creative juices going to meet the needs of their own customers.