Food consumers around the world are more similar than they are different. By some estimates, our shared food preferences are 90% similar. This makes sense, given that we are all human. Our bodies are all energized by starchy carbohydrates, whether they come from rice, wheat or another grain, and we all need the same set of macro and micro-nutrients to thrive. Protein is a key part of that nutrient mix to help our bodies repair cells as well as make new ones.
While there might be broad similarities, understanding that last 10% of differences across cultures is a complex task, yet it’s critical if your goal is to innovate new products in international markets. Different cultures have complex flavor profiles that have been shaped over millennia by climate, soil, farming technology and cooking traditions. Our individual food palate is shaped even before we are born by the foods our mothers eat and is refined over the course of our lives. Local cuisines, in other words, become intimately tied to our identity. “We are what we eat,” the saying goes. This is true both physiologically and psychologically.
Hormel Foods has long been a company with global reach, but as recently as two decades ago, most of its international business was through exports. In the past few decades the company has focused on building its presence in countries through joint ventures, subsidiaries, licensing agreements and plant facilities. Currently, Hormel Foods operates or partners in numerous facilities across the world, including Europe, Asia, South America and Australia. Asia has become a vital growth area with operations in South Korea, Japan, China and the Philippines. In all, Hormel Foods has a vast global portfolio outside the U.S. of over 40 major brands sold in more than 80 countries.
With this successful foothold in dozens of foreign markets, the company’s international business in both retail and foodservice channels focuses on achieving growth through new product innovation. Driven by an ambitious objective to double its international business by 2025, the Hormel Foods international team comprises scientists, marketers and brand managers, data analysts, operations and product gurus from many corners of the world. The global presence of Hormel Foods allows for insights and innovations from different geographic regions to be shared and implemented across the company.
The key to success within each market is to fully dive into the local context and community. By immersing themselves in the cultural fabric, the global team collects insights that lead to product adaptations and unique marketing approaches. It isn’t just about catering to local preferences; it’s about building brands and products that resonate with local communities and create authentic connections. Beyond building competitive advantage in a crowded market, the goal is to build trust.
Success in foreign markets requires deep localized knowledge. It requires that we dial in those differences, including taste preferences, market segments, ways of cooking, and emerging consumer interests.Director of Innovation, Hormel Foods International
The focus on retail and foodservice innovation has fostered a mindset across the company that is tuned to both regional and global trends. This allows the company to be more efficient, speed up the process and contribute to the local economy.
Speed to Market
To meet the needs of consumers across the world, Hormel Foods deploys a wide array of strategies. Based on observation, robust studies and ethnography, the teams in each market are aggressively launching new products. The recently launched Innovation Center in China is a shining example of innovation-focused brand building.
The new R&D building in the city of Jiaxing is built to be a hub for innovation, not just in China but across the Asia-Pacific region, including Indonesia, Japan, Vietnam and the Philippines. The Innovation Center is designed for collaboration, with a customer experience area, an interactive 100-seat theater and an R&D pilot plant. There are also five large lab spaces dedicated to sauces, snacks, peanut butter, packaging and meat products.
“Speed is a competitive advantage in Asian markets,” says Echo Hu, marketing director of Hormel Foods China. “It is critical to be first to market and to grab the mindshare of the consumer. Once you have a promising new concept, you can guarantee there will be a lot of fast followers trying to take market share. Our team is remarkably agile. We speed through decision gates and make quick adjustments.”
A half-year from idea to market in China, for example, is amazing, considering what has to happen during those months, including: initial concept, product development, contracting supplies, building out plant facilities, testing prototypes, designing packaging, safety testing, introducing the product to retailers, and creating and executing a marketing rollout plan. That pace is even more impressive given that many of the new products were created during the travel restrictions of the Covid pandemic.
New products have been a critical part of the double-digit growth that Hormel Foods has seen in China. In the last few years, new product sales have accounted for over one-third of revenue in the region.
Hormel Foods China leads our company in innovation, that leadership position is not an accident.Swen Neufeldt, group vice president of Hormel Foods International
“Hormel Foods China leads our company in innovation,” says Swen Neufeldt, group vice president of Hormel Foods International. “That leadership position is not an accident. The new innovation team in China has three key strategic focuses. The first is consumer-centric thinking and market research. The new facility is remarkable and worth celebrating, but it is the remarkable team of food scientists, chefs and product leaders that will give it life. This is how we are going to grow talent and continue to grow and serve consumers across the region.”
Most recently, the team has launched a Bistro Salami product to be paired with wine and other liquors. The consumer insights team noticed that Chinese consumers were increasingly treating themselves to small, affordable indulgences, including higher quality alcoholic drinks, but there were no decent snacks designed to complement this trend. Modifying the flavor for the Chinese palate, Hormel Foods created a Bistro Salami that could be sold and stored without refrigeration. It was a new product with no real competitors targeting those consumer desires.
“The innovation team in China is a well-oiled machine with strong front-end and back-end pipelines of products,” says Pollock. “To be honest, it’s been transformational. It is really a case study in delivering new products. We want to take those learnings about how to fire up innovation to Brazil, Mexico and the Philippines.”
Importing Flavors from Mexico
At MegaMex Foods, the Hormel Foods joint venture with Herdez del Fuerte in Mexico, innovation practices often emerge from a combination of methodological approaches and organic experiences. Kurt Lindsey, team lead of innovation and brand design at MegaMex Foods, explains that the company operates with a backlog of ideas that undergo an annual review, considering factors such as feasibility, alignment with the brand and potential value. This process isn’t merely about hard metrics; intuition plays a critical role. The idea-evaluation process is a mix of “art and science.”
The journey from idea conception to product on the shelf varies, and can be as fast as six weeks for certain products. Factors include the nature of the product, existing facilities and external partnerships. Some products have seen a swift development timeline, such as an enchilada sauce line that went from concept to a leading retailer’s shelves in under six months. However, other projects might span years due to intricacies like building production capacity, R&D testing, allergen concerns or regulatory processes.
To keep their thinking fresh, the innovators at MegaMex Foods frequently immerse themselves in emerging trends. Quarterly outings to new or trending restaurants or markets across Mexico and the American South are part of their ritual. Not only do they dissect the culinary offerings, but these experiences also serve as team-building exercises, fostering trust and facilitating reflections on past projects. Furthermore, the team organizes food odysseys and continuously scouts new products, sharing insights with each other. In the end, innovation isn’t just about having great ideas, Lindsey says. It’s about knowing which ones to pursue, how to execute them and ensuring that they resonate in the marketplace.
Exporting and Importing the Spirit of Innovation
Increasingly, innovative product launches in the United States are inspired or influenced by ideas imported from the company’s far-flung outposts. The individual Skippy® squeeze packets, for example, were first launched in Asia about six years ago. The consumer insights team learned that refrigerated peanut butter was often too hard to spread on the soft bread common in the country, and that smaller individual packaging suited the large number of young Chinese who live alone and have smaller refrigerators. The squeeze-pack packaging found success in Asia. In 2019, the product was launched in the United States.
Hormel Foods embraces a global perspective, recognizing that innovation is no longer confined to borders. All of the company’s engagements around the globe have created a dynamic system where new products, processes and ideas flow in multiple directions. Each regional team has the autonomy to adapt and iterate based on local needs and preferences, while also benefiting from the broader knowledge and resources of the global company. Every region contributes to the innovation ecosystem, and the success in one region often leads to success in others. Insights from the U.S. or China might inspire a product in Brazil, and a flavor trend or a new manufacturing process in the Philippines might find its way to the U.S.
The global kitchen has opened its doors, and everyone is invited to the table.