Hormel's a very smart company run by a terrific operator, Jeff Ettinger. He knows how to acquire, having already done quite well with both Skippy Peanut butter in 2013 and CytoSports Holdings, the maker of Muscle Milk last year.
He only does deals when he thinks he can make money rather quickly. The $775 million purchase of Applegate Farms, which is expected to have $340 million in sales this year, will be very accretive as soon as next year, so it can be justified on paper.
More important was Ettinger admitting why he had to do this deal: The company doesn't know the natural and organic retail scene, isn't in touch with the unconventional farmers and isn't shy about admitting it doesn't know the consumer of these kinds of goods. Stands to reason; someone who sells a lot of canned stew and Spam may not understand why a customer would pay up to buy something that tastes just like, say, old-fashioned bacon but has no nitrates.
The older generation says, "Big deal. What's the point?" Nor does the older generation care all that much about genetically modified organisms, or the treatment of pigs that are going to be slaughtered anyway.
The younger generation and those who have focused on these issues who are older, however, think about these things like it's a religion where the body is their temple.