Innovation

Innovation

At Hormel Foods, we take both a proactive and responsive approach to understanding our consumers’ taste preferences, by using tools such as satisfaction surveys and social media outlets. In the research phase of our product innovation process, we look at social trends, such as obesity and affordable healthy foods, and ask ourselves how we can and should create products that address those needs. (More information can be found in the Nutritious Options section of the report). Our aim is to produce innovative new products that are wholesome, savory and satisfying to fulfill the wants and needs of our consumers.

In this section you can read about:


Innovative New Products and Product Varieties

Hormel Foods and our subsidiaries continue to introduce savory, wholesome and high-quality new food products and varieties to meet consumer desires and needs. We focus on four platform areas: convenience meals; value-added protein products; value-added fresh meat; and solution products aimed at the foodservice deli market. The following featured products include some of the newest portfolio additions.

Hormel® cheese ball party tray

The party tray line at Hormel Foods continues to provide consumers with a convenient one-stop purchase that provides solutions for casual gatherings at reasonable prices. The new Hormel® cheese ball party tray was launched in 2011 as the first of its kind to incorporate both wet and dry meat with Hormel® honey ham and Hormel® pepperoni in one tray, to add variety to the offering for guests. The party tray also includes an almond-coated cheese ball.

Hormel® chili cheese dip kit

One of the most “viewed” of all the recipes available on the Hormel Foods website is the chili cheese dip. Building on the popularity of this dish, Hormel Foods introduced the Hormel® chili cheese dip kit, which includes a can of Hormel® no-bean chili and a can of cheese sauce. This innovative product has created an opportunity for consumers to enjoy chili outside of the bowl and provides a simple solution for any get-together.

New Hormel Country Crock® side dishes

Hormel Country Crock® side dishes provide consumers with convenient and quick mealtime side dish options. These products feature traditionally time-consuming side dishes such as mashed potatoes, macaroni and cheese, and broccoli cheddar rice — ready to serve hot in just five minutes. In 2011, Hormel Foods launched three additional Hormel Country Crock® side dish options: Bacon Ranch Mashed Potatoes, Au Gratin Potatoes with Bacon and 4-Cheese Penne Pasta with Broccoli.

Hormel® lower-sodium breakfast Canadian bacon

In response to customers’ increasing desire to include healthy products in their everyday meal solutions, Hormel Foods introduced a lower-sodium breakfast Canadian bacon. Made with natural juices only, this product is 97 percent fat-free.

Hormel® Natural Choice® cracked black pepper deli turkey

The Hormel® Natural Choice® deli line contains 100 percent natural meat with zero preservatives, free of added flavors, and colors. This past year, we expanded our Hormel® Natural Choice® portfolio with the addition of Hormel® Natural Choice® cracked black pepper deli turkey.

Hormel® pepperoni varieties

Hormel Foods continues to pave the way by introducing innovative new varieties of pepperoni, one of our top-selling products. As a result of consumers’ desire to enjoy the great taste of dry sausage anytime, we launched three new Snack Stix varieties in 2011: Italian Dry Salami Stix, Hard Salami Stix and Turkey Pepperoni Stix.

Lloyd’s® Barbeque snack rack ribs

In 2011, Hormel Foods created a product that allows consumers to enjoy the delicious flavor of ribs in a convenient snacking size. Lloyd’s® Barbeque snack rack ribs are available in different flavors such as original barbeque, honey mustard, spicy buffalo, tangy teriyaki and mango tango.


Product Innovation Approach

In 2006, Hormel Foods set the ambitious goal of reaching one billion dollars in sales by 2010 from new products introduced since the year 2000. The goal was achieved with $1.07 billion in sales in fiscal year 2007 – two years ahead of schedule. Building on this success, we announced “Go for $2B by 2012,” a challenge that aims to achieve growth through innovation – two billion dollars in total sales of products created since 2000 by the end of 2012. We continued our success during 2011 with more than 20 percent of our total revenue resulting from new products introduced since 2000.

Continuing the trend of constantly creating innovative food options, we had a total of 17 new retail products or line extensions launched and 246 projects in development in fiscal year 2011. Furthermore, to continue inspiring an innovative culture at Hormel Foods we have made additions to our innovation team, our governance structure and our new product development processes. We have a team dedicated to innovation management who is responsible for major new product development projects in our company. We have formalized a governance system at different levels of the organization to maintain the necessary checks and balances. We have also established a new system to automate our new product development process. The system has been implemented and is starting to generate the necessary metrics needed to manage innovation more effectively.

Annually, we create a consumer food agenda – a perspective on how consumers are choosing food and feeding their families based on lifestyle and priorities. The agenda is based on findings collected from consumer insights, marketing and other research at Hormel Foods, including awareness and brand health surveys, online category innovation surveys and consumer focus groups. In fiscal year 2011, our consumer insights team conducted more than 114,000 contacts with consumers and worked with additional parties to obtain data from millions of consumers. This direct learning is integrated with market and competitive observations.

Our consumer response team interacts directly with our customers on a daily basis to address product questions and gain valuable insight regarding consumer preferences. In 2011, the team fielded more than 140,000 contacts via e-mail, toll-free lines and online. These insights help us respond to changing consumer tastes and information needs appropriately.

Using this evidence-based approach helps us understand trends in consumer behavior, which include today’s new consumer authority and the need for increased transparency from brands and companies. These trends have evolved in part due to consumers’ increasing access to information and their eagerness to discuss brands in forums such as social networks. Consumers are also demonstrating an enhanced sense of responsibility in their purchase decisions—seeking out everything from wellness products to budget-conscious lower prices.

Furthermore, another main trend we have identified among consumers is their desire for value. Our consumers tell us that value means more than just the price of a product. Convenience, wellness and ethnic foods are among the areas consumers mention when they are describing value-added products.

At Hormel Foods, we continue to develop not only new methods of research that lead to insightful results, but also methods for managing that research. As an example, we have developed a system to inventory and archive all test concepts, which is facilitating our ability to build upon our learning from past experience, both pro and con, and to find consumer trends that are applicable across the corporation.


Products in Emerging Markets

Providing savory and nutritious options for lower income consumers is now one of our core international strategies. Seventy-five percent of Hormel Foods product lines sold in emerging markets are developed to meet basic local needs.

In every market, we are working to make our products affordable for more and more consumers, and our progress is gaining momentum. The company continues to develop the pricing strategy for emerging markets at the corporate level, in collaboration with local teams and partners to reach those with lower purchasing power.