The wraps - which tap into growing demand for satisfying on-the-go products and high-protein snacks and can be eaten hot or cold - feature a combination of meats, mozzarella cheese and a flatbread wrap, with 15-18g protein, and are targeted at teens.
“It's off to a great start,” Ettinger told analysts. “Sell-through to consumers through the retail channel for REV thus far this year are nearly $30m, and it's only been a national distribution for four months. So we think that item is building some very nice momentum.”
It was a launch that took us several years of consumer research to prepare for
He added: “It was a launch that took us several years of consumer research to prepare for. We put a big effort against it in terms of gaining distribution quickly, and then a strong ad campaign.
“We saw a great lift from the campaign itself, enhanced trial, our repeat numbers are strong… We're certainly hopeful that the strong campaign for REV within a couple of years here is going turn it into a solid profit contributor for the Refrigerated Foods group.”
Further ads- and line extensions - are planned, added Ettinger, who told analysts in August that REV could shape up to be a “significant franchise” for Hormel and serve as a platform for other types of grab-and-go products targeting young people.
“The initial line had eight items, we've added four more already and with probably a few more to come... “
Asked when it would start delivering to the bottom line, he said: “That's probably 2015.”
National ad campaign to support Skippy peanut butter to launch in late 2014
Skippy peanut butter, which Hormel acquired from Unilever in January in a $700m deal (excluding the Chinese business), is the #2 brand in the US peanut butter category and the leading brand in China.
For Hormel, said Ettinger, “The mission in 2014, frankly, on the domestic side, is rejuvenating the brand with the Skippy consumer. We intend to launch the first national advertising campaign in over 10 years to support the Skippy brand in the latter half of 2014.”
But he added: “We were also pleased with Skippy peanut butter sales this quarter. Our direct sales force has done a nice job generating distribution gains of Skippy peanut butter products domestically.”
Q4 highlights
Hormel’s fourth quarter earnings per share were $0.58, up 18% from a year ago, on sales up 7% to $2.3bn, driven by a strong performance from SPAM, Hormel Compleats microwave meals, HERDEZ sauces, tortillas and snacks, and Hormel Pepperoni, Hormel Natural Choice lunchmeat and LLOYD'S Ribs.
The Jennie-O Turkey Store segment “continues to build favorable momentum, delivering increased segment profit of 25% on a sales increase of 7% during the quarter”, said Ettinger.
Headwinds for 2014 include high beef input costs and potentially volatile hog costs
Looking ahead to 2014, he added: “Headwinds to our outlook for 2014 include high beef input costs and potentially volatile hog costs due to concerns in the marketplace about the PED virus affecting supply. The impact of the virus on the industry overall remains to be seen.”
Minnesota-based Hormel Foods is best known for Spam and Skippy, but also owns a swathe of other brands including Stagg Chili; Peloponnese Greek foods; CHI-CHI's, Doña María, Don Miguel, Embasa and Del Fuerte Mexican products; Jennie-O Turkey Store products, and scores of products under the Hormel brand.
The firm, which posted sales of 8.8bn in fiscal 2013 (a 6% increase on 2012), has five key segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and All Other.