BOSTON — Hormel Foods Corp. made a splash at the Barclays Global Consumer Staples Conference on Sept. 4 with the introduction of its Happy Little Plants meat alternative brand. The first product in the line is a ground plant-based alternative containing 20 grams of protein, 7 grams of fat and 180 calories per 4-oz serving. A key source of protein is from non-G.M.O. soybeans.
“While we are showing our retail offering today, rest assured that this is the base formula that has food service applications as well,” said James M. Splinter, group vice-president of corporate strategy during the company’s presentation in Boston. He added that in the next several weeks Hormel will be expanding the ground offering with additional flavors and forms. Further into the future the company plans to bring a full range of fresh plant protein foods to market under the Happy Little Plants banner.
“Our insight is simple,” Mr. Splinter said. “Consumers are increasingly curious about and motivated to buy healthy, great tasting sustainable protein choices, not just meat replacements. We believe today’s consumers demand choice and Hormel is perfectly positioned to provide a plant-based protein alternative.”
The new brand will be managed through a new business entity within Hormel Foods called Cultivated Foods. Mr. Splinter described Cultivated Foods as an internal incubator to accelerate growth.
“We intend to leverage our nimble refrigerated supply chain to produce Happy Little Plants in our existing infrastructure and use our national distribution network, which excels at managing short shelf life products. Another significant capability with Happy Little Plants will be leveraging our direct sales force. Our direct selling forces in retail, deli and food service are well known for their solutions-based selling and customer-first approach.”
During the question-and-answer portion of the presentation, Mr. Splinter was asked why Hormel chose to launch a brand versus acquire a start-up. He said they looked at some options but were not able to get to an acceptable valuation on some of those models.
“The other piece of it was, as we reflected upon the technology that is going to be needed to be successful, we realized we had a lot of internal capabilities that we could leverage, namely our infrastructure,” he said. “We’ll be repurposing a lot of our technologies in our infrastructure, in our plant operations (and) in our refrigerated supply chains. These are all things that the young start-ups are working to build right now, and we already have that incumbent into Hormel.”
Looking at what has happened in retail with plant-based milks and then the number of plant-based meat alternatives being introduced at food service, Mr. Splinter estimated the size of the meat alternative market to be between $10 billion to $20 billion. He declined to give specifics on Hormel’s expectations for Happy Little Plants, calling it a “classic new product launch” that isn’t going to be accretive to the company in the near term.
“It's a very small business that we’re just creating,” he said. “So, this is something we are going to invest to grow over a longer-term period. But our outlook would say that we do believe that, as all innovation within Hormel, it has to be accretive to the margins within the company. And so this product, we forecast, will be able to do that, as we move through the maturation of getting this product distributed and supported in the marketplace.”
The ground product will retail for $8.99, which Mr. Splinter said is a premium in the category.
“We believe that there’s a premium to be had in this area, and we can’t wait to really get scale behind this effort from a branding standpoint,” he said. “So, our branding would be commensurate with the amount of distribution we gain and the amount of sales velocity we gain. And we’ll continue to do what Hormel has always done. We’re great brand builders. This isn’t the first brand we brought to the marketplace. When you think of Hormel Natural Choice, we have the playbook. We know how to build brands and bring them to market successfully, and we’ll apply that playbook to Happy Little Plants as well.”