June 1, 2004
Hormel Foods’ guardian administrators guide the company’s retail and foodservice product projects to keep them in sync with marketing trends.
Jeff Ettinger — recently named corporate president and chief operating officer — and Gary Ray, executive vice president of refrigerated foods, share 50 years of combined service at Austin, MN-based Hormel Foods. Both men also serve on the company’s board of directors — Ray since 1990 and Ettinger since this past May.
That’s not all they share, however, for each executive serves as a conduit regarding the retail and foodservice business segments under their leadership — turkey products for Ettinger. Meanwhile, Ray’s focus is pork products, including Canadian and pre-cooked bacon, fully cooked entrées, and dry sausage.
Innovative products energize turkey business
Wilmar, MN-based Jennie-O Turkey Store — representing a merger between Hormel Foods’ existing Jennie-O Foods and The Turkey Store Company in Baron, WI, which Hormel acquired in 2001 — weathered difficult market forces to deliver profitable products under the leadership of Ettinger.
As the ninth president of Hormel Foods, succeeding Joel Johnson, Ettinger makes a victorious return to corporate headquarters, where his career began in 1989 as corporate attorney in the firm’s law department.
“We created the Jennie-O Turkey brand from scratch three years ago,” Ettinger reviews. “Our brand tag line is Turkey for the Way You Live Today.”
Continuing to report to Johnson, his new duties include direct oversight of grocery, refrigerated, specialty, and turkey segments.
“Jeff has successfully run a major unit of the business for the past four years, in addition to his staff experiences in the law and treasury functions,” reports Johnson, board chairman and chief executive officer. “He’s a battle-tested insider who has managed through supply cycles in the turkey business with a focus on the execution of value-added strategies. His training across functions has resulted in a leader around whom the whole company will coalesce.” Based on Hormel Foods’ second-quarter results ending April 24, 2004, Jennie-O Turkey Store’s operating profits rose by 165 percent. Product volume declined by 7 percent in the face of last year’s planned reduction designed to facilitate better management of raw material. Meanwhile, dollar sales rose by 11 percent.
“We’re not looking at driving commodity meat higher, we are looking at branded meat products,” Ettinger stresses. “These are exceptional numbers because you just don’t typically see high single-digit growth in the food environment. We also see a buoyancy to demand in the aggregate on turkey this year — between such forces as BSE and the Atkins diet — that wasn’t there in the aggregate the past year. We had success with some of own products and took share in certain categories. This year, I get the sense that the boat is rising for everyone somewhat in terms of consumers just being more interested in turkey products.”
Noting that the bottom-line swing in breast meat sales — $1.90 per pound this year as opposed to $1.18 last year — Ettinger says Hormel Foods is positioning to grow its branded turkey business, no matter what happens on the commodity sales side.
“That means spending money commensurate with growth on consumer research, marketing initiatives, and research and development whether times are good or bad in the commodity field for sustained value-added growth,” he says. “It’s the price of poker.”
The value of pork
“What separates us from our competitors is that we’re a premier value-added marketing company,” Ray affirms. “We try to add value to all the products in our division.” Ray, who began his career with Hormel Foods in 1968 on the plant production side, transitioned to sales and marketing 12 years later in a transfer to corporate headquarters. His promotion placed him in supervisory positions over grocery products and meat products.
“Making the shift from production to marketing has been enlightening,” Ray says. “I didn’t realize the positive side of being able to communicate with our customers. I can dialogue with them knowing that they understand I am knowledgeable about how products are produced and the quality that goes into them. We’re not just selling products, we also bring production background to the mix.”
In his 35 years with Hormel, Ray has enjoyed a ringside seat to the unfolding of meat-industry trends.
“We [Hormel Foods] have outpaced the industry in foodservice growth with out new initiatives and are working with the operators in finding ways for them to put more value-added-type pork products on the menus,” he says. “A good example is our line of Austin Blues smoked barbecued items without sauce. Each part of the country has a different preference on sauce. We also offer high quality pre-sliced meats in our Bread Ready line that can be used for sandwich-making and a variety of other applications. The beauty is that this line eliminates labor and worker-safety concerns in foodservice.
Noting that foodservice is a trend-setting arena influencing new product introductions, Ray gives his company high marks for using such information.
“Our structure is such that we can use our foodservice knowledge on the retail side of our business,” he explains. “We can do this because we are one division without a silo approach, so we can take some of those concepts into retail.”
Hormel’s retail flavored meats line, featuring peppercorn, marinated, and teriyaki tenderloins, has been very successful, Ray reports. “The latest thing giving us a competitive edge is our exact-weight program, which is a big help for retailers dealing with labor shortages. They can take pre-priced, exact-weight tenderloins and roasts right out of the box and put them right on the shelf. As one retailer said, ‘I might have somebody working in the shoe department yesterday working in the meat department today.’ That means we have to provide easy and simple solutions for retailers.”
Fully cooked entrées are another successful category for Hormel. “We are the market leader in the fully cooked entrée category by helping retailers build a destination point in their stores to help recover some of the business they may have lost to foodservice,” Ray explains. “Our company should pride itself on is how market driven we are in recognizing consumer trends. I think we do a great job with that around here.”