- Hormel is acquiring Columbus Craft Meats, a premium deli meat and salami company, for $850 million, according to a company release.
- The purchase adds a premium salami and charcuterie offering to Hormel’s deli lineup, which includes the Jennie-O, Applegate and DiLusso brands. San Francisco-based Columbus Craft Meats generates approximately $300 million in annual sales, and is expected to grow at a rate of 5% or more. The company also counts millennials among its core customers, according to Joe Ennen, chief executive officer of Columbus Manufacturing.
- "The acquisition of Columbus will serve as a catalyst for uniting all our deli businesses into one customer-facing organization," Jim Snee, president and chief executive officer at Hormel Foods, said in the release. "This acquisition significantly enhances our scale in the deli by broadening our portfolio of products, customers, and consumers. The synergies we can unlock with this acquisition are clear and I'm excited for the next evolution of our company."
During a presentation earlier this year, Hormel CEO Jim Snee said his company has a “pristine” balance sheet and is on the lookout for acquisitions. In August, the company purchased foodservice provider Fontanini Italian Meats. Now, Hormel has added a premium brand to its core deli line.
Columbus Craft Meats is a 100-year-old company that specializes in charcuterie and salami, and has undergone impressive growth of late. Its packaged salamis have become a mainstay in gourmet and mainstream grocers across the country, while its deli selections, including roast beef, turkey and ham, have picked up significant momentum of late. According to Columbus’ website, it was the most widely distributed deli meat brand in the U.S. last year.
Columbus has made operational expansions to support this growth. In August, Columbus introduced a new line of pre-sliced, uncured, antibiotic-free salami. A month later, it announced a $16 million expansion at its Hayward, California curing facility that will allow it to produce 30% more salami.
For Hormel, Columbus checks a lot of boxes. It’s a top player in its category, and a fast grower. It adds another dimension to Hormel’s existing deli lineup, which includes the premium Applegate and DiLusso brands. It’s also a very popular brand with millennials, according to Columbus CEO Joe Ennen.
Hormel’s interest in expanding its deli lineup is understandable. According to data from Nielsen Perishables Group, the deli department notches around 17% of total fresh dollar sales. Along with produce and foodservice, it’s seeing the highest volume and dollar sales of any store section.
Hormel was likely attracted to Columbus’ growing meat snack products, which are growing many times faster than other snack categories such as potato chips. The company’s Panino line of packaged cheese-and-meat wraps has grown 800% since its introduction last year. Columbus also makes a line of packaged salami and cheese crisps.
In recent years, Hormel has been active in M&A with acquisitions of Applegate, Justin’s and Muscle Milk. These deals have given the company a stronger presence in fast-growing categories like natural and organic meats and nut butter snacks — helping the company post record highs in 2016. With its acquisition of Columbus Craft Meats, the Hormel has further solidified its presence in a popular segment of the industry that shows great promise for future growth.