Hormel Foods is to offload its business in Brazil to domestic food producer Zanchetta Alimentos as the US group looks to “simplify and streamline its portfolio”.
Zanchetta Alimentos is acquiring a business operating under the Ceratti brand and which includes production. The financial terms of the deal were not disclosed.
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In a brief statement yesterday (29 June), Hormel Foods said it wants to “focus its international strategy on markets with the strongest long-term growth opportunities”. Just Food has asked which markets those are.
Hormel, which owns brands including Skippy and Spam, took control of Ceratti in 2017 through its purchase of Brazilian packaged meats company Cidade do Sol.
When reporting its financial results, Hormel divides its business into three segments: retail, foodservice and international. In the year to 26 October, Hormel’s international business accounted for 6% of its $12bn in net sales.
On an organic basis, Hormel’s international business grew its net sales by 1% to $709.1m during that year. However, the segment ran up a loss of $80.4m compared to a profit of $92.1m a year earlier due to an impairment charge on a minority investment in Indonesia. Hormel also noted “competitive pressures” in Brazil in the fourth quarter.
In the second quarter of Hormel’s current financial year, a three-month period that ran to 26 April, the international division’s organic net sales climbed 5% due to “strong results” from Spam exports and Hormel’s business in China.
The segment’s second-quarter profit grew 14.8% to $45m. Hormel’s total segment profit was $609.2m.
In February, Hormel reached a deal to sell its whole-bird turkey operations in the US to Life-Science Innovations.
In October last year, the company entered into an agreement with Forward Consumer Partners to separate its Justin’s nut butter and chocolate snacks business.
In the report, the company also pointed to “competitive pressures in Brazil” and weaker market conditions as factors weighing on adjusted international profit.
