INTERVIEW-Hillshire CEO keen on flavored sausage, meat snacks

Tue Jul 3, 2012 9:12pm BST

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By Martinne Geller

NEW YORK, July 3 (Reuters) - When most food company executives talk about emerging markets, they mean countries like China and India. For Hillshire Brands CEO Sean Connolly, the exciting untapped market is something different -- snack meat.

Hillshire Brands Co's (HSH.N) new chief executive is excited about flavored sausages and snacks made with meat as he looks to add "provocative" new items to his company's lineup of cold cuts and hot dogs.

New meat products as snack food should be a key driver of sales and profits for the newly independent company, Connolly said, since they can serve more occasions, command higher prices and expand Hillshire's reach beyond traditional grocery stores.

"We view that as an emerging market," Connolly said. "There is a compelling consumer need around getting protein into the snacking occasion, as opposed to some of the hollow calories that they rely on today."

Connolly, who has spent a decade at both Campbell Soup (CPB.N) and Procter & Gamble (PG.N), declined to talk about specific products. Still, he said he was open to things that require cooking, like the new Ball Park slider hamburgers, as well as foods that can be eaten straight from the package.

"There hasn't been a lot of creative thought put into that space over the years," Connolly said.

Slim Jim, owned by ConAgra Foods (CAG.N), is a leader in the meat snack category.

Among Hillshire's portfolio of brands, Jimmy Dean has seen consistent support and innovation, Connolly said, while others have not. One brand that is lacking is the company's namesake Hillshire Farms, whose smoked sausage is Connolly's favorite company product.

"I'd like to see us make that line more contemporary. We have some ideas up our sleeve to do just that," Connolly said, citing flavor varieties as an example.

"You should expect us to shake it up. We're going to bring some provocative news to our categories," he said.

The company's most expensive and fastest growing brand is Aidells, whose sausages come in flavors like pineapple and bacon, mango and jalapeno, and artichoke and garlic.

STANDALONE COMPANY

The Illinois-based company last week spun off its international coffee and tea business and changed its name. The move marked the end of a years-long narrowing of focus for Sara Lee Corp, which at one time owned everything from Coach bags to Playtex bras to Kiwi shoe polish.

Sara Lee decided to split up after takeover bids were not high enough to lure it into a sale. Now, the leaner, meat-focused Hillshire Brands is seen as a likely takeover target.

Its shares closed at $29.99 on Tuesday on the New York Stock Exchange, rising nearly 18 percent in the first three days of trading as a pure-play company.

Analysts have mentioned Tyson Foods Inc (TSN.N), Hormel Foods Corp (HRL.N), Smithfield Foods Inc SFD.N and JBS (JBSS3.SA) as possible suitors.

Connolly declined to comment on the takeover speculation.

"I wouldn't be here if I didn't think we were an incredibly attractive company," he said, pointing to the company's assets, people and opportunity to increase shareholder value.

"Our management team is quite confident we can do that as a public stand-alone company. We also know we have a fiduciary responsibility to our shareholders to maximize value."

(Reporting By Martinne Geller in New York; editing by Jim Marshall)

((martinne.geller@thomsonreuters.com)(646 223-6023)(Reuters Messaging: martinne.geller.reuters.com@reuters.net)) Keywords: HILLSHIREBRANDS SNACKS/

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