Grocery Products Segment Investor Day Presentation

Transcription

1 Grocery Products Segment Investor Day Presentation Ron Fielding, Executive VP Grocery Products Scott Aakre, Vice President Grocery Products Marketing

2 Our products are generally found in the center of the supermarket

3 The segment s legacy brands have been complemented by a series of acquisitions and joint ventures

4 And most of our top-line growth over this time frame can be attributed to this direction $1,000.0 $800.0 Net Revenues CAGR = 3.0% CAGR% 13.9% $ MM $600.0 $400.0 $ % $ E Historical Grocery Cores Acquisitions/Joint Ventures

5 Our focus is now being re-balanced to address our franchise players ; by adding more relevant options

6 Otherwise, market share 1 will be increasingly difficult to protect, especially from private label Private Label Canned Chili Canned LM MW Meals Canned Stew Salsa Canned Hash Chunk Meats Olive Oil CAGR % [Volume] Share PP week Nielsen ending

7 And our strong price premiums will be more challenging to maintain By Most Popular Size Average Retail Private Label % Variance HORMEL Chili $1.26 $ % SPAM $2.23 $ % DINTY MOORE $2.38 $ % HORMEL/VF Chunk Chicken $1.79 $ % CHI CHI S Salsa $2.23 $ % HORMEL Corned Beef Hash $2.23 $ % 52 week Nielsen ending

8 Ensuring that our franchise players remain relevant to customers and consumers is a key focus area

9 Our strategic orientation deals directly with this need Protect and grow our business by Focusing resources Leveraging category leadership positions Driving brand Brand relevancy Relevancy Fixing or exit under-performing businesses or categories Pursue optimum QUALITIVITY [quality + productivity] by Balancing cost/quality needs Building a business system that simultaneously lowers cost, improves quality and/or extends packaging, product formulation options Pursue acquisitions that Add scope, scale and/or capability Deliver 20% pre-tax margins Have potential for growth, category leadership

10 And we believe meaningful innovation will drive consumer traffic back to the center of the store once again

11 Recent consumer marketing efforts have reignited our chili business despite price increases/tough competition % Share of Market 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 34.0% 30.4% 32.5% 11.4% 10.9% 11.5% STAGG Brand 1 HORMEL Brand 1 Core Western Markets

12 Investments in new packaging, product forms and advertising are driving brand health

13 Spending efficiencies are derived from our new HORMEL brand umbrella campaign

14 There is a broad effort against the advancement of our #1 franchise player

15 SPAM Singles has been key to opening up new doors [households] and is now rolling nationally Returning to SPAM Franchise 32% NEW to SPAM Franchise 68% Singles Buyer Index Category Buyer Index Age Under Age 55 and over Income $50K - $75K Income $70K Source: Spectra Data Affluent Member HH

16 The DINTY MOORE franchise is also making solid moves towards increasing relevancy

17 New/better products, clear brand messaging and focus on flavor/health will fuel CHI-CHI S growth

18 Authentic and leading Mexican brands 1 round out our portfolio 1 HERDEZ Corporation is a joint venture company formed between Grupo HERDEZ and Hormel Foods in 1996

19 Herdez commercials

20 Mexico s #1 salsa brand appeals to a broad consumer audience HERDEZ Salsa Mountain Region Pacific Region Unit Share 17.6% 11.1% Share Position 1 #1 # week Nielsen ending (1) excludes private label

21 In the mid 1980s, Hormel Foods envisioned product solutions that were ultra convenient; 25 years later we reached the tipping point!

22 Microwave vision video

23 Our new HORMEL COMPLEATS line solves the consumer need for REAL FOOD, REAL FAST Complete meal, no need to add any sides. REAL MEAL Comfort foods that leaves you filled up. Hot food; ready in 90 seconds; done in 10 minutes. More filling than soup. Faster than frozen. REAL FAST

24 Our current branding efforts highlight important product attributes New Hormel Brand Mark Complete Meal Use a Fork Speed Improved Appetite Appeal

25 The added focus and resource deployment is driving growth Tonnage Up 38.6% v. YAG CAGR = 55.5% E

26 Today s COMPLEATS line includes a broad variety of traditional meals

27 All key measures 1 continue to move in a positive direction LE Consumption ($MM) Distribution (%ACV) Velocity ($/MM) Share (PP) HH Penetration (%) n/a Buying Rate (volume/yr.) n/a Avg. # Items ACNielsen latest 52 weeks, does not include WAL*MART, alternate channels

28 We have launched consumer communication targeting the right now lunch occasion Target: hardworking men & women Situation: 10 minute right now meals Competitive frame: sandwich, soup and frozen entrees Benefits: faster + more complete + more filling

29 Compleats commercials

30 Line segmentation is under development and is key to continued growth Segmentation Targets: Traditional Larger Portions Ethnic Healthy Kids Seniors Teens Breakfast

31 Early next year we will launch a variety of products that promote healthy lifestyles Under 250 calories Under 10 grams fat and less than 3 grams saturated fat. No trans fats. Preservative Free Sodium 600 mg 20 grams of Protein Meets USDA guidelines for Health Lifestyle Launch Date February 2008

32 Significant capability/capacity is being developed to support our microwave meals growth Rochelle, Rochelle, Illinois Illinois Plainview, Minnesota MW MW Meals Meals Beloit, Beloit, Wisconsin New Focus Plant Tucker, Tucker, Georgia Georgia

33 A solid execution of our strategy will deliver steady growth in segment profitability 45% 25% 40% 35% 20% Gross Margin % 30% 25% 20% 15% 10% 5% 15% 10% 5% Segment Profit % 0% Fiscal Year Gross Margin % Segment Profit % 0%

34 Grocery Products Q&A