BOSTON — Ground turkey is not a new product, but current market conditions have given the management of Hormel Foods’ Jennie-O Turkey Store business unit optimism they may make inroads into the market for ground meats.
“Even if there are a few more cattle around in the next year or two as that cattle cycle tends to move a little bit, we really don’t expect a significant (price) reduction at retail,” said Glenn Leitch, president of Jennie-O Turkey Store. “That cattle business hasn't been terribly profitable and somebody is going to need a margin there at some point in time going forward.”
Mr. Leitch added that Jennie-O is determined to drive ground turkey sales growth and the company’s target market is younger consumers.
|Glenn Leitch, president of Jennie-O Turkey Store|
“We know we’ve got to hit that millennial set and one thing we found about millennials is they value fresh, and at Jennie-O Turkey Store we do fresh better than anyone else,” he said.
Mr. Leitch defined the ground beef category as having 2 billion lbs in volume and approximately $7 billion in sales.
“If we can steal one share point, that’s 21 million lbs of conversion to turkey,” he said. “Now, we’re not quite at a point a year, but we have been making inroads and there’s no reason for us to expect that will change.”
To achieve his goals, Mr. Leitch will have to overcome several hurdles. For starters, Hormel’s turkey business is in the process of recovering from the outbreak of highly pathogenic avian influenza that was so devastating to the egg industry. While A.I. struck with the most force in Iowa, it had a similar effect in Minnesota, where many of the turkey flocks that supply Jennie-O are based.
Flock repopulation is on track, Mr. Leitch said, and, as of Sept. 1, 85% of the company’s farms have been repopulated.
“With that taking place, by the time we get into January, February, our production plants should be operating at a normal or near normal level,” he said.
A second issue is household penetration. While ground beef may be considered ubiquitous in many households, ground turkey household penetration is at 24%, but Mr. Leitch said that number makes him optimistic.
“The good news is household penetration has been incrementally moving up,” he said. “The better news, frankly for me, is that there’s still a long way to go. We can still put ourselves in a lot more households and this is our goal.”
He added that the product “over indexes” with millennials.
“We’re at 28% with that group and they are growing at a faster clip than the general population.”
It may be argued that Jennie-O is stealing a page from such companies as WhiteWave Foods and Hampton Creek as they strive to offer alternatives to traditional products. In addition to ground turkey, the company is offering a turkey sausage roll to compete with the traditional pork sausage roll.
“If you think about the pork sausage roll, that’s a big business,” Mr. Leitch said. “We were literally nothing three years ago and … now it’s a $20 million business for us.
“We can take a pork roll and a turkey roll side-by-side and at the same lean content we can often be at a lower price point or we can offer a premium lean content for the same price point and, so for consumers, that’s a pretty compelling argument.”
Finally, Mr. Leitch said university and health care institutions also offer good opportunities for the Jennie-O brand.
“As new food service rules come in play in future years for nutritional content and calorie counting, we think it will be more and more important for the role of turkey in this environment …,” he said.