Hormel Buys 'Cleaner Wiener' With Applegate Acquisition
Natural and organic meat marketer Applegate Farms -- which touts its hot dogs as a "cleaner wiener" -- has reached a deal to be acquired by Hormel Foods Corp., whose brands include Spam.
The transaction, valued at $775 million, is expected to close within 60 days. Applegate is expected to have $340 million in sales in 2015. The company's portfolio includes natural and organic hot dogs, bacon, sausages, deli meats, cheese and frozen products.
The acquisition is the latest example of a big food company acquiring a smaller competitor as part of a strategy of appealing to the changing tastes of shoppers. "A growing number of consumers are choosing natural and organic products. This deal allows us to expand the breadth of our protein offerings to provide consumers more choice," Hormel CEO Jeffrey Ettinger said in a statement.
Hormel's portfolio includes Skippy, Farmer John and Jennie-O.
According to Austin, Minn.-based Hormel, Applegate will operate "autonomously as standalone subsidiary." That follows the recent of trend of big companies seeking to keep their smaller acquisitions separate in hopes of maintaining their culture and cachet with foodies. Applegate, which employs about 100 people, is based in Bridgewater, N.J.
Applegate's advertising has recently used a muscle-bound, needle-injecting character to symbolize other meat brands. The implication in one of the ads (above) is that its larger competitors use farm animals that are given growth hormones.
In a message posted on its website on Tuesday, Applegate took pains to say that its standards would not change under the new ownership. "The only difference now is that our new partner, Hormel Foods, will offer more opportunity to find your favorite Applegate products in more places. And we're going to keep pushing to get antibiotics out of the food system and for transparency in GMO labeling."
Applegate even tackled potential concerns from consumers worrying about "contributing to Hormel Foods' profits." The response: "Hormel Foods has the resources to help us grow and improve our standards. If we keep growing as a brand, that will help change the entire meat industry."