Video (00:30) : Skippy will run TV advertisements for the first time since 2009 in its key geographic markets, including Minnesota, and unveil a social media campaign all under the buzzword "Yippee."
Almost everyone loves peanut butter. In the United States, it's a lucrative $2 billion-a-year market.
That's why Hormel Foods Corp. acquired the legendary Skippy brand 18 months ago from Unilever for $700 million.
Now the Austin, Minn.-based food giant hopes to schmooze its existing consumer base and wrest market share from its main rival — the spread whose campaign tagline for years has been, "Choosy mothers choose Jif."
Beginning Monday, Skippy will run TV advertisements for the first time since 2009 in its key geographic markets, including Minnesota, and unveil a social media campaign all under the buzzword "Yippee."
The marketing rollout is the product of BBDO Minneapolis, the Upper Midwest office of the New York-based ad agency that was established in the Twin Cities more than 80 years ago to handle the advertising needs of Hormel.
"Our goal is to reconnect with Skippy lovers. It's been more than five years since Skippy has been on the air with an ad," said Mike Guanella, Hormel's senior product manager for Skippy. "Skippy is an important contribution to our [grocery] division and is going to be an important driver of growth."
Hormel recorded sales of $8.8 billion in 2013, of which $1.5 billion came from grocery products.
The ad campaign is about making Skippy the "fun" peanut butter choice of consumers.
"You can't say Skippy without smiling," said Noel Haan, executive creative director at BBDO Minneapolis. "It's about saying we're having fun because of Skippy."
Peanut butter is an American staple. According to the Mintel Group, a global market research organization, peanut butter is consumed in 92 percent of U.S. households, and an even greater share — 96 percent — of households with children.
The spread has evolved beyond the ubiquitous peanut butter-and-jelly sandwich to become a snack item. Brands that used to be classified as either creamy or chunky now have versions that are infused with the likes of honey and chocolate or are produced naturally without preservatives or artificial coloring.
When Hormel acquired Skippy in January 2013 from Unilever, company executives described the purchase as a "significant opportunity" that "reinforces our balanced portfolio," which includes fresh and canned meats and prepared foods.
"It was a great acquisition for them," said Brian Yarbrough, a securities analyst with Edward Jones in St. Louis. "Skippy was a brand that was underinvested in by Unilever. In the grand scheme of things Skippy is not a huge item but combined with Hormel's other categories, it can move the needle."
Domestic sales of Skippy in the most recent 52-week period that ended in mid-August were $339 million, according to IRI, a Chicago-based market research firm that tracks sales at conventional food retailers.
Targeting the Jif brand
But Skippy's numbers pale in comparison with the peanut butter sales of J.M. Smucker Co., whose Jif brand is the category leader. Smucker's piece of the peanut butter category exceeds $900 million.
While a new advertising campaign should increase Skippy's visibility among American consumers, brand loyalty is still a daunting hurdle to jump.
According to Mintel Group, Jif was the brand of choice for 53 to 55 percent of the households eating peanut butter between 2007 and 2013. In the same time frame, Skippy was the brand of choice in 22 percent of homes. "Improving household penetration for these products will be a steep challenge for marketers," Mintel concluded.
But Hormel executives believe that new products will help drive consumer awareness.
"There's a certain degree of brand loyalty but it is not so inclusive that people will never switch, especially when you look at brand innovation," said Hormel's Guanella.
Since acquiring Skippy, Hormel has introduced a version that mixes natural peanut butter with dark chocolate. In another innovation, Skippy now comes in 1½-ounce single servings that allow consumers to take peanut butter wherever they go.
"Peanut butter is still most used in sandwiches but the fastest growing area is in snacks," Guanella said.
"Hormel is doing exactly what they want to do," Yarbrough said of the new peanut butter spinoffs.
Skippy's TV advertising will focus on key Skippy markets on the West Coast, in the Northeast and in the north central region, which includes Minnesota.
Only 'happy' peanuts
The Yippee campaign features a peanut factory where a peanut inspector selects only happy peanuts for the Skippy brand while the rejected peanuts are shipped off to a snack bowl at a dull office party honoring a salesman of the month.
Skippy Yippee is not to be confused with the slang phrase, "Yippee Skippy," which has never been part of the spread's advertising.
The social media component of the campaign includes a website, peanutbutter.com, and a "Yippee button" shaped like a peanut that plays humorous video clips when pushed.
"We want to keep innovating. We want a campaign that Skippy can do for a long time," said Haan. "We want to make Skippy and Yippee synonymous and it takes time to do that."
David Phelps • 612-673-7269
