Maybe the first indication should have been when Whole Foods Market, Inc. (NASDAQ:WFMI) declined to carry Hormel Foods Corporation (NYSE:HRL)'s fresh meats products: the King of Processed Foods might have an image problem when it started taking preservatives out of its foods.Spam® is such an icon of preserved food that it has its entire own sub-culture, with everything from spamku to Spam cookbooks. Google's Gmail serves up Spam recipes instead of ads when you click on the spam (email) folder. Hormel's blue collar customer base adores Spam and the company's other ingredient-packed products, from chili to "deli" luncheon meats. But in fact, "shelf stable" meats have declined from nearly 20% of the company's sales in 2003 to 16.3% in the year ending October 30, 2005. Now making up the majority, 54%, of the company's sales are perishable meats -- although these include everything from the higher-quality, less-processed varieties the company wishes to become known for to the old standbys, from Hormel pepperoni to Little Sizzlers sausages to Jennie-O hot dogs.
A story in the Wall Street Journal [subscription required] this morning highlights Hormel's desires to become a healthier company, which have included innovations in preservation (High Pressure Pastuerization, develped by Washington's Avure Technologies, Inc.) and a raft of new product introductions like the Natural Choice deli meats -- the ones Whole Foods wouldn't stock. The question: if Whole Foods won't take the company seriously as a provider of natural meats, will anyone else? And will the company's loyal customers stand for it?
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