Hormel Foods Corp., one of the nation's largest meat companies, is developing plant-based food, its top executive said Tuesday, joining a new fray after a meat-alternative maker produced the biggest IPO so far this year.
The Austin, Minn.-based food maker built an empire on animal-based meat products but has begun calling itself a protein company in recent years. Now, Hormel is developing a vegan pizza topping and other plant-based products to capitalize on apparent demand for satisfying, non-meat foods.
"The consumer seems to be speaking about having plant-based as a choice," Jim Snee, chief executive of Hormel, said at the 2019 dbAccess Global Consumer Conference in Paris.
Analysts and investors pressed Hormel's leadership to show a long-term strategy for the rapidly expanding food frontier.
"We understand that it is a shiny new toy," Snee said, referring to plant-based protein. "We get that. It is one of our shiny new toys as well. It is something that is certainly on our minds, like it is everyone else, and there is a lot of work happening both in the market and behind the scenes."
At the Paris meeting, Snee acknowledged the meteoric rise of Beyond Meat, the California-based maker of plant-based meat-alternative products that went public early last month. Its shares opened at $25 and nearly tripled on the first day of trading. Since then, the price mostly has climbed, reaching $177 on Monday before falling to $125 on Tuesday after an analyst warned the price is overheated.
Tyson Foods, which surpassed Hormel's market capitalization this spring, has been more public about its plans to compete with Beyond Meat and other plant-based companies. It and others, like Cargill, also have been vocal about experimenting with lab-raised — or cultured — meat, which is created from the cells of animals.
Market observers and experts expect fierce competition in this space and are closely watching every move made by the large players.
"Startups are disrupting the meat production value chain through the development of high-tech protein products, threatening established players like Tyson," according to research published in the winter by CB Insights. "It's just a matter of which companies will get their products to market first and best position their products as worth the price."
Tom Day, head of refrigerated foods at Hormel, said the company is most excited about creating products that blend meat and plants — like its new Applegate Blend Burger — because "the product has got to taste good."
Hormel is expanding its food-service business with restaurants and in the grocer's deli aisle. Snee said the company recently launched a product called the "Fuse Burger" that is predominantly made from ground turkey and brown rice.
"We think that consumers, in terms of engaging with products like this, a lot of times the first place that happens is in a restaurant, off of a menu," Snee said, "So we are hard at work to make sure we have the food service offering that can help consumers connect with that space and make a decision if that's something they want to continue to pursue."