The maker of Spam is the latest to join the healthy eating movement.
Hormel Foods (HRL), the company behind the famous canned meat, announced it would buy organic meat brand Applegate for approximately $775 million dollars. This move comes as major companies look to add healthier products to their food offerings.
Applegate, which promotes its products as “raised humanely without antibiotics and hormones,” is a good way for Hormel to diversify and capitalize on the popularity of natural and organic products says Yahoo Finance’s Aaron Task.
"I can't think of anything that's less organic than Spam…and Applegate Farms has developed a great brand for grass-fed organic sausages and other meat products," he says. "I think this makes a ton of sense for Hormel to try to diversify their offerings and speak to the more modern consumer."
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Over the past year packaged food companies have underperformed the S&P 500 (^GSPC), amidst growing concerns that the companies have not addressed customer demands for more healthy and fresh foods.
Hormel is just the latest major food company to tap into the organic trend through an acquisition. Campbell Soup (CPB) bought juice maker Bolthouse Farms in 2012, while General Mills (GIS) purchased organic mac and cheese maker Annie's for $820 million last year.
Grocery stores are also picking up on the healthful trend. Target (TGT) recently announced that it plans to emphasize healthy food in favor of packaged goods, according to The Wall Street Journal. Meanwhile, Walmart (WMT) is urging its food suppliers to treat animals humanely and limit the use of antibiotics.
"This is not a trend. This is mainstream American grocers," Task says. "This is what the American consumer wants to eat right now and I think anybody in the food industry, if they're not responding to this trend, they're going to be out of business in short order."
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