Skippy and Spam
Hormel adding Skippy peanut butter to its spread sheet
Excerpt:
Hormel Foods of Austin, Minn., whose signature Spam product leads a wide array of retail meat offerings, announced Thursday that it is spreading itself into the peanut butter grocery aisle with the acquisition of the 80-year-old Skippy brand.
The $700 million acquisition from Unilever, of Englewood Cliffs, N.J., "represents a significant opportunity for Hormel Foods," Jeffrey M. Ettinger, chairman of the board, president and CEO at Hormel, said in a statement announcing the deal. "It allows us to grow our branded presence in the center of the store with a non-meat protein product, and it reinforces our balanced portfolio."
Ettinger also sees Skippy as enhancing the company's efforts overseas, adding, "The fast-growing international line will also strengthen our global presence and should be a useful complement to our sales strategy in China for the Spam family of products."
The transaction, which is pending regulatory approval, includes Unilever's Skippy production sites in Little Rock, Ark., and in China's Shandong province, Unilever said.
Skippy has counted among its commercial endorsers baseball star Derek Jeter and onetime Mousekateer Annette Funicello.
Norman Rockwell once illustrated Skippy's print advertisements.
The Skippy domestic line, first introduced in 1932, offers 11 varieties of peanut butter products. Peanut butter is a $2 billion business, with 74 percent of American households as buyers, making it the second-most popular sandwich in the United States behind ham. Among peanut butters, only Jif sells more domestically. Peter Pan is third. Internationally, Skippy is the leading brand in China and is sold in more than 30 other countries on five continentsComment: Consider Peanut Butter Brands. Here's the Peanut Butter and Spam Pasta recipe mentioned in the article.
Below (image source) is one of the Rockwell Skippy ads.
Skippy And Spam: Together At Last
ReplyDeleteFor Unilever:
Skippy's worldwide revenues were just $300 million. Unilever has three brands with revenues of $2 billion or more, twelve brands with $1 billion in revenue, and 10 more knocking on the door. Even if it held 100% market share, Skippy still wouldn't be in its top three brands in terms of revenues. Building billion dollar global brands is Unilever's focus these days and even though food still represents 30% of its $47 billion in annual revenue, much of it comes from Knorr and Hellmann's. Skippy was a rounding error. Financially, it won't miss the revenue or the earnings. What it tells investors is that Unilever's focused on its brands and regions where growth is greatest. The rest must be cast aside. Hormel's gain is also Unilever's gain.
For Hormel:
With the acquisition of Skippy, Hormel gains an additional foothold in a different part of the grocery store
1/8/13: Dissecting a deal: Hormel’s purchase of Skippy should benefit international sales, stockholders:
ReplyDelete[China] may be one of the biggest reasons Hormel pulled the trigger on the Skippy deal, as its consumers are not only just catching on to peanut butter, but Hormel’s larger presence there should help Spam sales in the process.
Skippy is the leading peanut butter brand in China and is sold in more than 30 other countries on five continents. Total annual sales are expected to be about $370 million, with nearly $100 million of that outside the U.S., and the majority of that in China, at $30 to $40 million, followed by Canada.
“China has been a focus for more than a decade … and [the peanut butter market] is growing rapidly there,” Ettinger said. “I hope it will complement our growing Spam market.”
Hormel gets the vast majority of its sales in the U.S., with only about 4 percent of revenue coming from abroad. But the $100 million in international sales will be an immediate 30 percent boost for its international division.
“[Peanut butter] is growing at a faster rate internationally than the domestic product,” Ettinger said. “Spam is really our only global franchise for Hormel Foods, so this gives us a second shelf-stable American iconic item that can be sold in multiple countries.”