Spam sales up, but Hormel profits down
Process eliminates water use in RPET cleaning
Wal-Mart to pay customers for scanning blunders
Food prices likely to increase in 2009
New Tic Tacs have front door
'Green’ tray for organic food wins prize


Spam sales up, but Hormel profits down

by Pan Demetrakakes
Executive Editor


Hormel Foods is enjoying a spike in demand for its iconic Spam, but that wasn’t enough to save the company from a one-third earnings decline in the last quarter.

Spam, the long-established chopped, canned pork product, is experiencing something of a surge, probably due to tough economic times. Hormel has been running Spam lines two shifts a day, seven days a week, since July, and has told its union to expect to stay on that schedule for the foreseeable future.

The business agent for the union told the New York Times that Spam’s surge is undoubtedly due to the economy. “We’ll probably see Spam lines instead of soup lines,” he said.

The good news for Spam is that it’s one of the cheap, filling foods that seem to do well in hard times. Kraft Foods, for instance, has seen spikes for such basic products as Jell-O, Velveeta processed cheese and Kool-Aid. These sales increases have contributed to good results for Kraft: It reported an earnings increase of 9.1% on a sales jump of 21% in the most recent quarter.

Hormel, however, hasn’t fared as well. Although sales were up 12% in the most recent quarter from the previous year, earnings dropped 33%.

Management cited rising fuel and feed costs, a glut of turkey breast meat, and a $20 million investment loss in a trust fund for executives. In addition, items like Spam, as well as chili and luncheon meat, attract consumers in tough times but also have lower profit margins.

Top Developments

Process eliminates water use in RPET cleaning
The Food and Drug Administration (FDA) approved a new recycling process that eliminates the use of water for cleaning recycled polyethylene terephthalate (RPET) flake. ECO2 Plastics’ process combines a biosolvent that is FDA-approved for use as a food additive with liquid carbon dioxide in a closed-loop system that pours nothing down the drain. The FDA approval allows for RPET cleaned in this manner to be used in food-contact packaging.

Wal-Mart to pay customers for scanning blunders
California Wal-Mart customers who spot any price-scanning errors will get $3 back at the cash register. The deal, which is part of a settlement with California’s attorney general and San Diego’s district attorney, is a response to customers being overcharged across the state. County Departments of Weights and Measures found that 164 Wal-Mart stores in 30 counties had made scanning errors, overcharging customers an extra $8.40 at checkout, on average.

Food prices likely to increase in 2009
Despite recent declines in the prices of grain and other commodities, the prices of most packaged items and meat are holding steady or increasing. Economists project that since food companies have not caught up with the previous increase in commodity prices, the total cost of food, especially meat and poultry, will continue to increase in 2009. The Agriculture Department forecasts that food prices will increase 3.5% to 4.5% in 2009, compared with an estimated 5% to 6% increase by the end of 2008. Some economists are projecting even steeper increases next year.

New Packages

New Tic-Tacs have front door
A new variety of Tic Tac breath mints uses a sliding door in the front panel as an alternative opening. Tic Tac Chill mints from Ferrero USA, Somerset, N.J., feature two ways of accessing the product: the standard flip-top closure on the top edge, and a door that slides down to reveal a square aperture in the front panel. The consumer removes a film overwrap, then takes a tamper-evidence tear strip off the top of the sliding door. Tic Tac has a website that features instructions on how to use the new package.






‘Green’ tray for organic food wins prize
A tray for organic frozen meals for children has won the Pack Expo Selects award, chosen by attendees at the recent Pack Expo trade show in Chicago. Kids Organic, a line from Popkoff’s Frozen Foods, San Francisco, was honored for using a rigid polypropylene tray from Coextruded Plastic Technologies Inc. The tray, trade-named Go-Green, is made with a proprietary thermoforming process that the company claims uses 30% less energy and reduces scrap to 10%, one-quarter of the usual amount.