As Hormel Foods assembled a roster of enviable snacking brands during the past decade, executives longed for that one big-name acquisition to solidify the company’s presence as a major player in the category.
It finally came last June when Hormel completed its purchase of the Planters snack nut portfolio for $3.35 billion from Kraft Heinz, the largest deal in the Minnesota company’s 131-year history. The acquisition, which also included Cheez Balls and Corn Nuts, instantly made Planters the biggest brand in Hormel’s portfolio.
“We felt like we had some really great products that were already in the snacking space, but we just needed to double down through that big anchor brand like Planters,” said Jeff Frank, vice president of grocery products at Hormel. “It was absolutely a transformative acquisition.”
Planters has given Hormel a deeper presence in trends popular with consumers, including plant-based foods and products with clean and simple ingredient lists. It has provided a platform for Hormel’s other snacking brands to expand their shelf space in convenience stores. In addition, Planters rounds out Hormel’s portfolio by giving it a deeper spread for parties and gatherings like the Fourth of July or the Super Bowl with salsa, guacamole, peanut butter, nuts and premium deli meat options.
Hormel, which has long been known for its presence in meat through brands such as Spam and Jennie-O, has acquired several snack brands since 2013. These include Columbus, a maker of premium craft meats; nut butter maker Justin’s; and Skippy peanut butter. It also is part of a venture established in 2009 with Mexico-based MegaMex that jointly controls Herdez, Chi-Chi’s and La Victoria salsas and Wholly Guacamole, a line of refrigerated dips.
Frank said Hormel ultimately settled on Planters because it was transformative, augmented its existing snacking portfolio and the company already had a deep understanding of peanuts through Justin’s and Skippy. Today, 25% of its portfolio is non-meat products. With the purchase of the nuts brand, Hormel now has a major presence in three key snacking areas: savory, salty and sweet.
Rafik Lawendy, head of marketing at Hormel who came to the company from Kraft Heinz as part of the Planters deal, said the brand has thrived under Hormel’s ownership because it has committed the money and people “to really drive that growth.” With the brand now the largest in Hormel’s portfolio, and the deal amounting to the biggest in the company’s storied history, there is a meaningful incentive to invest in Planters.
“The focus and attention and commitment to the brand is what will make a full difference,” Lawendy said. “That was obviously harder at Kraft with the amount of other brands and competing priorities.”
In the coming months, Hormel plans to introduce new flavors for Planters, overhaul its packaging to tailor it to the eating occasion and expand the brand into other types of nuts. It will also place a greater focus on promoting the brand by highlighting its heritage, the farmers who grow the nuts, its plant-based attributes and the nutritional facts of the offering.
With roughly 80% of nut consumption taking place among consumers 40 years or older, according to Hormel, the company is optimistic the changes will help attract younger consumers who are more curious about what’s in their food and want to make more nutritious food choices.
John Boylan, a senior equity analyst with Edward Jones, said Hormel is excelling at “breathing new life” into the Planters brand “that arguably was neglected for quite some time” by changing its marketing, boosting spending and placing it on more shelves. Still, he said the real test for Hormel will come in the long term as it will need to continue freshening Planters and providing innovation to the broader nut category where private label competition is prevalent.
“It’s really great that the Planters brand is on-trend as a protein and plant based and all that,” Boylan said. “Now, it’s a matter of getting consumers excited about buying nuts again.”
So far, Frank said Planters “continues to exceed our expectations.” Lawendy said the brand has gained “lots of distribution” and posted “huge growth” since the deal closed, although Hormel declined to share specific sales figures. The company did note that sales of Planters at convenience stores, which are Hormel’s second-largest account after retail giant Walmart, have experienced double-digit growth following the acquisition.
Less than a year after closing the Planters deal, Frank said the company remains on the lookout for other acquisitions, although he would not say whether they would be in snacking or another segment.
Hormel is “certainly not done with our acquisition strategy,” Frank said. “We’re constantly evaluating additional acquisitions for the organization, large and small.”