Low-and-slow success

Lloyd's Barbeque products are still smokin' after 30 years

(MEATPOULTRY.com, July 11, 2008)

by Joel Crews

Back when Lloyd Sigel began selling smoked pork ribs in 1978, after partnering with the owner of a local meat company the year prior, he likely had no idea how popular the retail barbecue niche would become. Indeed, when Sigel’s company, Lloyd’s Food Products Inc., was eventually purchased by Pittsburgh, Pa.-based Main Street Capital Holdings in 1997, who would have thought that its sales would top $90 million before becoming the acquisition target of General Mills Corp. in 1999. A few years later, Lloyd’s Barbeque Co. again changed hands, this time to Hormel Foods Corp., in early 2005.

At the time, Joel Johnson, who was then CEO and chairman of the board, said the barbecue-based acquisition was a logical addition as the company focused on convenience foods. He accurately predicted growth opportunities and margin improvement for the brand thanks to Hormel’s established distribution system and obvious access to meat supplies.

"Lloyd’s brands have earned strong market share in the retail refrigerated entrée category – a business that Hormel Foods knows well," Johnson said after the acquisition. "We believe Lloyd’s will continue to flourish as part of our roster of refrigerated products."

Since then, Lloyd Sigel’s namesake brand has played a key role in the growth of Hormel’s refrigerated foods business, a segment that in its 2008 second-fiscal quarter represented 52 percent of the company’s net sales of approximately $1.6 billion. The segment also includes Hormel’s SPAM, Compleats, Natural Choice line of products as well as other entrée brands.

The Lloyd’s acquisition came during the same year when Hormel also acquired Mark-Lynn Foods (a Breman, Ga.-based foodservice manufacturing and distribution firm) and pork processor Clougherty Packing, Vernon, Calif. Three years after those deals, few people are second-guessing Hormel’s decision to invest in what has become a lucrative niche.

Thirty-years strong

Thirty years ago, Lloyd Sigel started the product line with ribs. "His belief was that consumers should not have to go to a rib joint to get great-tasting ribs," says Steve Venenga, product line manager. He recalls Sigel was a true entrepreneur. "He was on a mission to make it so people could enjoy ribs at home," and attempted to introduce it in retailers’ already-crowded frozen food cases. After being squeezed out of the freezer, Sigel found opportunities existed for refrigerated, fully cooked rib products, vacuum-packaged at retail. "As it turns out, Lloyd’s ribs were the first fully cooked, refrigerated dinner item in that set," he adds.

Eventually, in 1996, Lloyd’s introduced its chopped products in what are now its signature tubs. During a conversation with Sigel not long after the Hormel acquisition, Venenga says the founder told him that barbecue sandwiches seemed like the next logical step for the company’s line of products beyond the ribs. "The tricky part for him was trying to figure out what package it could be in. He tried a few of them and it was the re-sealable top that wound up being the winner."

Still operating from its original plant in St. Paul, Minn., Lloyd’s offerings include fully cooked barbecue ribs and shredded beef, pork and chicken in the company’s distinctive plastic tubs. Various flavors are offered of the various products, including Honey Hickory, which was introduced in 2001 when the company was still a part of General Mills.

The company also continues selling its mainstay pork babyback ribs and center-cut beef ribs. All of the products are produced from the plant’s 69,000 square-foot manufacturing area where 97 workers are employed and three shifts are operated. Operationally, Venenga says the line already was being produced from a state-ofthe-art facility. The processing facet of the operation wasn’t broken and Hormel officials didn’t see the sense in fixing it. In terms of the ownership transition, "It’s just been a matter of our operations group getting in there, getting their arms around it and making it part of our corporation," according to Venenga. Hormel is methodically moving closer to its goal of national distribution of both the rib and tub products. "You can get Lloyd’s Barbeque just about anywhere in the U.S.," says Venenga.

Gaining insight

When Hormel purchased Lloyd’s, company officials quickly realized the value of finding out more about the barbecue niche from consumers of the products, many of whom consider themselves experts on lowand-slow cuisine of their particular regions. "Once you have a brand like Lloyd’s, you really need to be barbecue experts," he says.

"We’ve spent most of our time with consumers since we purchased Lloyd’s," says Venenga. Some of the recent research led to the decision to making the tub products "meatier." As part of this year’s marketing effort commemorating the 30anniversary of the Lloyd’s line, product developers introduced products that are fortified with 10 percent more meat, according to the company. Marketing for Lloyd’s new "meatier" formula, which was rolled out this past month, will be called out on the packages of the tub products of pork, beef and chicken for about six months.

Hormel has also recently added a line of ready-to-eat barbecue-based appetizers, including meatballs and cocktail smokies, according to Venenga, which are also available in tubs. To that end, Hormel has met a goal of making barbecue easier to access and serve more often. "It’s for anytime," Venenga says. "It’s not specialoccasion food by any means."

In terms of market share, Venenga says the Lloyd’s brand is available in approximately 82 percent of major retail stores. He says the barbecue category has evolved to represent more than $150 million in annual sales, according to AC Nielsen, and constitutes 17 percent of the total volume of sales in the heat-and-eat segment. "The barbecue segment (as a whole) is roughly 30-million pounds," says Venenga, who won’t discuss the volume of products produced from the lone Lloyd’s plant or sales of the products in the Lloyd’s line. He does hint that the Northeast is among the leading regions when it comes to demand for rib products, a trend the company plans to capitalize on.

As part of the company’s effort to increase what he calls "solid" sales and to commemorate Lloyd’s 30 anniversary, marketing officials have embarked on the first-ever national print campaign promoting the brand under the slogan of "Feed the Need," to appeal to consumer cravings for barbecue. Hormel has also partnered with Kathy Peel, who is also known as America’s Family Manager, to serve as its spokeswoman and promote the value of Lloyd’s products as part of families’ activity planning. The goal of the ad campaign is to grow the brand’s household penetration, he says, with the focus being on the best-selling SKUs, which are for the original beef and pork products.

Venenga says some of the conclusions drawn from consumer research for the Lloyd’s line fly in the face of conventional thinking when it comes to barbecue. Contrary to what can be almost religious followings when it comes to preferences on flavors and styles of barbecue, it seems there are at least as many consumers whose preferences have no regional bounds. When Hormel acquired Lloyd’s in 2005, marketers like Venenga believed there would be challenges posed by regional tastes.

"But for what these fun-family food consumers are looking for – the lovers of our Lloyd’s products – there really isn’t a lot of difference across the regions." It is for this reason, he says, that the flavor profiles haven’t been changed and the only changes have been in making the tub products meatier. "We found that one formula really can work; we’ve proven that it works," he says.

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