Hormel Foods turns to pricing, supply chain revamp to battle meat inflation

Core Insights - Hormel Foods is implementing a multiyear Transform and Modernization initiative to mitigate margin pressures in fiscal 2025, which ended on October 26 [3][4] - The initiative aims to transform the supply chain and reduce portfolio complexity, resulting in increased distribution capacity and optimized manufacturing footprint [3] - Hormel anticipates that the initiative will continue to alleviate inflationary pressures and support margin expansion in fiscal 2026, although specific savings from the program will no longer be reported separately [4] Financial Performance - In fiscal 2025, Hormel faced elevated pork and beef prices, with cost inflation for pork bellies, pork cutout, and pork trim rising by 25%, 10%, and 20% respectively [8] - Beef prices also saw significant increases throughout the year, impacting the company's margins despite pricing actions taken at various times [8] Supply Chain Challenges - Beef costs are expected to remain high and pose challenges throughout fiscal 2026, while pork input costs are projected to decline but remain above the five-year average [5] - Turkey supplies are anticipated to remain constrained through the first half of 2026 due to avian flu [5][8] - Tyson Foods is also experiencing supply challenges, relying on value-added products and operational efficiencies to navigate reduced hog and cattle supplies [6]