stockrowWhat it does
Hormel Foods Corporation is a global manufacturer and marketer of branded food products. Founded in 1891, it is headquartered in Austin. Its portfolio includes Planters, SPAM, Jennie-O, Skippy, Applegate, Wholly, Hormel Black Label, Fontanini, Bacon1 and Hormel pepperoni, alongside more than 30 other brands.
The company develops, processes and distributes meat, nuts and other foods. It sells them through three segments: Retail, Foodservice and International. Retail supplies grocery stores, mass merchandisers, club stores, natural-food chains, drugstores, dollar and discount chains, and e-commerce providers. Foodservice supplies distributors and operators serving restaurants, hospitality, healthcare, K-12 schools, colleges and universities, and convenience stores. International sells through retail and foodservice channels outside the U.S.
Management said on the call that its retail priorities include protein-centric offerings, including Genio ground turkey and Applegate products, as well as chili, refrigerated entrees, bacon, canned foods and snack nuts. Foodservice offerings include premium prepared proteins, branded pepperoni and customized solutions. The company manufactures through its processing facilities and co-manufacturers, then uses sales teams, brokers, distributors and carriers to reach customers.
How it makes money
Hormel sells packaged and prepared foods, generally earning revenue when branded or other food products are sold through its retail, foodservice and international channels. Its business combines perishable foods, including turkey, pork, bacon, pepperoni and prepared proteins, with shelf-stable foods such as SPAM products, snack nuts, peanut butter, chili and canned offerings. The company concentrates on branded, value-added foods and uses marketing, product innovation, quality assurance and sales coverage to support its products.
Retail is its largest segment and includes predominantly U.S. consumer retail channels as well as its MegaMex Foods joint venture. Foodservice sells to distributors and operators serving food away from home. International includes overseas retail and foodservice sales, international joint ventures, equity-method investments, royalty arrangements, and operations in China and Brazil during fiscal 2025. The company also licenses certain products for international manufacture on a royalty basis.
Fiscal 2025 net sales totaled $12.1 billion; in Q3 2026, organic net sales declined 2% compared to the prior year.
Retail revenue was $7.5 billion in FY2025, while Foodservice revenue was $3.9 billion. Perishable revenue was $8.8 billion in FY2025. The company said Foodservice delivered its 12th consecutive quarter of organic net-sales growth in Q3 2026, with profit growth outpacing sales performance. Management also said lower commodity-based pricing affected portions of Foodservice sales, while pricing actions and changes in product mix affected retail volumes. The company expects fiscal 2026 net sales of $12.1 to $12.2 billion and organic growth of 1% to 2%.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Perishable | $8.8 billion | 72.9% | 3.21% |
| Shelf-stable | $3.3 billion | 27.1% | −2.64% |
Customers and how it sells
Hormel serves customers across retail, foodservice and international channels. In the U.S., its retail products reach grocery stores, mass merchandisers, club stores, natural-food chains, drugstores, dollar and discount chains, and e-commerce providers. Its Foodservice segment reaches distributors and operators in restaurants, hospitality, healthcare, K-12 schools, colleges and universities, and convenience stores. Sales personnel work in assigned territories and dedicated teams for major customers, supplemented by independent brokers and distributors.
Walmart accounted for 15.6% of consolidated gross sales less returns and allowances in fiscal 2025, and is a customer of the Retail and International segments. The top five customers collectively represented approximately 38% of consolidated gross sales less returns and allowances in fiscal 2025.
The company sells products in all 50 U.S. states. U.S. revenue was $11.4 billion in FY2025, or 94.5% of revenue. It also has a presence in Australia, Brazil, Canada, China, England, Indonesia, Japan, Mexico, the Philippines, Singapore and South Korea. Management said on the call that it sold its Brazil operations and is focusing its international portfolio on Asia Pacific.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| U.S. | $11.4 billion | 94.5% | 1.36% |
| Foreign | $669.1 million | 5.53% | 5.07% |
Suppliers and costs
Hormel’s principal raw materials are pork, turkey, beef, chicken and nuts. It buys hogs for its Austin, Minnesota processing facility, uses long-term pork supply agreements and spot-market purchases, and raises most of the turkeys it needs. It also buys raw materials from various suppliers and has become more dependent on suppliers as it shifts toward a value-added portfolio. Cashews and certain other inputs are sourced internationally.
The company uses supply contracts, forward buying, futures, swaps and options to support supply availability and manage portions of expected input-price risk. It manufactures through processing facilities and co-manufacturers; products are mainly distributed by common carriers. Turkey production costs can change with grain and fuel prices.
Pork belly, beef and nut costs pressured fiscal 2025 earnings. Management said on the call that logistics, grain and beef costs are expected to remain pressured in some areas, while the company had a favorable read on pork input costs. It also reported elevated freight and logistics costs, lower production volumes and inventory-rebalancing actions in Q3 2026.
- Revenue$12.1B
- Cost of revenue−$10.2B
- Selling, general and administrative−$996.6M
- Other operating costs−$176.6M
- Operating income$718.6M
Competitive position
Hormel operates in highly competitive U.S. and international meat and food markets. It competes with manufacturers of pork and turkey products, and with national and regional producers of beef, chicken, fish, nuts and plant-based proteins. Competition spans price, product quality and attributes, brand identification, product-line breadth and customer service.
No individual competitor companies are named in the company material provided. The company seeks to compete through marketing, direct and indirect sales personnel, quality-assurance programs, product innovation, and relationships with industry partners. Its brand portfolio includes registered trademarks in the U.S. and other countries; it had thirteen U.S.-granted and six foreign-granted patents as of October 26, 2025. Trademarks may be renewed indefinitely while they remain in use.
Our reading: Brand recognition is a medium source of moat because the company has a broad named portfolio and registered trademarks, but the markets compete directly on price and other product attributes. Our reading: Its direct sales organization and Foodservice operator model are a medium source of moat because management said they help identify trends and address customer needs, though competitors can also offer food products through similar channels. Our reading: Patents are a limited source of moat because the company reports relatively few granted patents and they have finite terms.
Growth opportunities
Hormel’s growth initiatives include brand support, product innovation, market-based pricing, foodservice expansion, value-added capacity, digital marketing, e-commerce and international development. The company expects fiscal 2026 organic net-sales growth of 1% to 2%, driven by categories, brand support, innovation, pricing and its assumptions for raw-material costs. It expects all three segments to contribute to fiscal 2026 segment-profit growth.
Management said on the call that Foodservice had delivered 12 consecutive quarters of organic net-sales growth through Q3 2026. It described premium prepared proteins and branded pepperoni as strong contributors and said the business had broad-based growth across channels, customers and product platforms. In Retail, management said Genio ground turkey, Applegate, chili, refrigerated entrees and Planters posted growth or gained traction during the quarter. It is shifting more marketing investment toward retailer media and digital channels.
The company is investing in capacity for Hormel Fire Braised and Applegate products, data and technology, automation, maintenance and cost savings. It is focusing International on Asia Pacific after selling its Brazil operations. Management said on the call that it relocated its international group vice president to Singapore to improve regional connection, engagement and execution. The company expects lower pork prices to help margins over time, although it expects continuing pressure in logistics, grain and beef costs.
- $11.4BFY2021
- $12.5BFY2022
- $12.1BFY2023
- $11.9BFY2024
- $12.1BFY2025
- $12.1BFY2026 guidance
Structural risks
-
Commodity and input-cost risk: Pork, turkey, beef, chicken, nuts, grain, fuel, packaging and production costs can change. Pork belly, beef and nut costs significantly pressured fiscal 2025 earnings, while management expects pressure from logistics, grain and beef in some areas.
-
Customer concentration risk: Walmart accounted for 15.6% of fiscal 2025 consolidated gross sales less returns and allowances, and the top five customers represented approximately 38%. The loss of major customers could materially affect a reportable segment.
-
Consumer-demand and volume risk: Management said the consumer environment is strained and is not expected to improve meaningfully in upcoming quarters. Retail volume can also be affected by pricing elasticity, portfolio exits and softer category conditions.
-
Food safety and product-liability risk: Food production and distribution expose the company to contamination, mislabeling, spoilage, product tampering, advertising claims, nutritional concerns and consumer product-liability claims.
-
Operational and third-party risk: The company relies on suppliers, co-manufacturers, carriers and service providers. Service disruption, supplier non-performance, cybersecurity incidents, severe weather, power outages, lower plant utilization and other supply-chain disruptions can affect operations and costs.
-
International and regulatory risk: International sourcing can affect input availability and pricing, while trade restrictions, tariffs, food-safety requirements, labeling rules and other regulation can affect operations.
Bottom line
Our reading
Our reading: Hormel is a predominantly U.S. branded-food manufacturer whose business is anchored in Retail and supplemented by Foodservice and a smaller international operation; recurring demand comes from consumer retail food purchases and food-away-from-home customers. Our reading: Its portfolio, sales coverage and Foodservice model provide operating advantages, while commodity costs, customer concentration, price-sensitive consumer demand and execution in manufacturing and logistics remain material constraints. Our reading: The company is reshaping its portfolio toward protein-centric, value-added offerings and Asia Pacific while investing in brands, digital channels, capacity and supply-chain capabilities.