Hillshire Hones In On Recession Proof Meat Snacks

Sara Lee‘s North American successor Hillshire Brands (NYSE:HSH) plans to add new flavored sausages and snacks made with meat to its line-up of cold cuts and hot dogs. The company is looking at the new meat products as snacks as snack food as a new growth driver for the company. The company competes with major food and consumer companies like Kraft Foods (NYSE:KFT) and Nestle (NYSE:NESN).

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Fast Growth in the Meat Snacks Segment

Meat snacks is a fast growing segment of the U.S. snack food market that has grown by 20% over the last five years with an 8.4% increase in 2010. The growth of the niche segment is driven by the growing consumer preference for protein-based snacks, rather than carbohydrate-based or calorie-adding snacks.

The meat snack category includes products like jerky, snack sticks and pork rinds, which can be had on the go. Meat snacks are a popular staple in American convenience stores, accounting for more than 70% of their sales. ^[1] In particular, meat jerky products have been very resilient to economic downturns and their sales grew by 6% last year. Currently, the meat snack category is dominated by Slim Jim, owned by ConAgra Foods.

Would Help Target More Eating Occasions and Command Premium Prices

So far, Hillshire’s portfolio of brands has had a limited presence in the meat snacks segment. The entry into meat snacks segment will help Hillshire tap on more eating occasions, command higher prices and expand Hillshire’s reach beyond grocery stores. The products are likely to include foods that require cooking as well as those that can be eaten straight from the package. The company also plans to diversify its popular products like Hillshire Farm’s smoked sausages by adding flavors and seasonings. ^[2]

Sara Lee has recently split into two companies, and its American meats business renamed Hillshire Brands (NYSE:HSH) and the Europe-based beverage business, renamed D.E Master Blenders 1753.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Processed meat snacks gaining popularity, MSU Study, May 2011 [↩]
2. Hillshire CEO turns attention to meat snacks, Chicago Tribune, July 2012 [↩]