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Hormel Foods Corporation SWOT & PESTLE Analysis

ID : 52588553| Nov 2019| 15 pages

COMPANY PROFILE -Hormel Foods Corporation

Business Sector :Food Processing

Operating Geography :USA, Australia, Brazil, Canada, China, Japan, and Philippines

About Hormel Foods Corporation :

Hormel Foods Corporation was founded in 1892 in Austin. It produces a variety of food and meat products. Turkey and pork are the major raw material for its products. Apart from the commodity meat business the company has expanded its product portfolio to value added consumer items through organic growth and acquisitions. The business operates in four segments: Grocery Products, Jennie-O Turkey Store (JOTS), Refrigerated Foods, and International & Other. Some of the major brands include Skippy peanut butter, SPAM meat, Dinty Moore stew, Wholly Guacamole dips, Jennie-O turkey, Justin’s, Hormel Black Label and many more. Hormel has won several awards for its community service efforts. For consecutive 10 years it was named one of “The 100 Best Corporate Citizens" by Corporate Responsibility Magazine.

Hormel Foods Corporation Revenue :


Total net sales
$9.55 billion (FY ended Dec 31, 2018)

Competitive Analysis of Hormel Foods Corporation

SWOT
PESTLE
The SWOT analysis of Hormel Foods Corporation is presented below:
Strengths
Weaknesses
1. Strong brand presence
2. Innovative products
3. Strategic acquisitions
4. Research and Development
5. Economies of scale
1. Competition in the food sector
2. Failed acquisitions
Opportunities
Threats
1. Going international
2. Emerging technologies
1. Changing consumer needs
2. E-commerce
3. US-China trade war
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Detailed SWOT Analysis of Hormel Foods Corporation

 

Strength

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Weakness

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Opportunity

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Threat

1. Changing consumer needs: The company has a strong profile makes it attractive for investments. However, there are challenges ahead which need inspection. The product portfolio has been diversified from the traditional commodity meats to other segments containing various value-added brands as Justin’s, Jennie-O and Applegate. But around 20% of the product mix remains in the commodity meats. With the changing consumer preferences, people are avoiding pre-packaged foods that occupy center positions of the grocery stores and wants fresh products from the outer rim of the store. Though the majority sales of the company come from the perimeter of the store which is higher than its rivals, but with changing preferences and low pricing power in the commodity areas there is a setback. Hormel Foods raises its own pigs and turkeys. The feed prices for these animals are outside the control of the management and therefore, the commodity prices are volatile. This has been a major reason for the struggle of Hormel Foods in recent years.

2. E-commerce: In addition to its competing rivals, Hormel also has to deal with large grocery chains Walmart and Kroger. With the growth of digitization and e-commerce giants like amazon, Hormel has to change its business domain for sustenance. As these platforms offer ultra-low prices there would be increased pressure on Hormel to comply with the trend of cheap prices. To achieve the targeted growth the management has to find more efficient ways of running the production lines to be able to meet both the growth and low pricing criteria. A number of consumers shop online getting all the required products at their door step. It is therefore essential that Hormel focuses on innovative ways of reaching out to the consumers and venture into product diversification to be able to meet the growing preferences. Acquisitions of smaller niche brands or larger established brands shall continue to be a major driver for product mix expansion in the coming future.

3. US-China trade war: There has been a drop in profits for Hormel Foods due to the imposition of high tariffs by China and Mexico on US pork and beef. This came as retaliation to US, when it imposed higher tariffs on imports of steel and aluminum. This trade fight has negatively impacted the meat processing industry. Such escalation of prices has made American pork less competitive in the global market. There is increased volatility and uncertainty of rapidly changing trade politics globally. The American farm sector primarily operates from trade surplus and such circumstances are negatively affecting the industry. Due to cheap prices of beef and pork and excess availability turkey prices have also been hit. Sales have failed to hit the targets, freight costs have increased and exports have come down. Hormel Foods reported a 9% decline in sales and a 31% decline of profit in the segment. It is unlikely that the trade fight would resolve soon continuing to impact the industry.

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Check Out Analysis of Other Relevant Companies

TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Hormel Foods Corporation Analysis Report

1. Hormel Foods Annual Report 2018 - https://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_HRL_2018.pdf

2. Hormel Foods Revenue 2006-2019 - https://www.macrotrends.net/stocks/charts/HRL/hormel-foods/revenue

3. Hormel Foods Website - https://www.hormelfoods.com/

4. Hormel Foods company profile - https://www.reuters.com/companies/HRL

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Copyrights and Disclaimer

Hormel Foods Corporation SWOT and PESTLE analysis has been conducted by Mohini Kejriwal and Hormel Foods Corporationreviewed by senior analysts from Barakaat Consulting.

Copyright of Hormel Foods Corporation SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Hormel Foods Corporation SWOT & PESTLE Analysis
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