For CPG heavyweights Hormel, Utz and Tyson Foods, downsizing isn’t a sign of failure or weakness, but rather a strategy to concentrate capital, labor and management attention to ultimately drive growth through more efficient procurement, manufacturing and logistics.
Historically, shuttering plants, divesting brands and letting go of staff were emergency measures viewed as a last resort to stem runaway costs or a signal that consumer demand did not support production or distribution.
But, when applied surgically and proactively, they can help companies “hold the core and grow,” as Howard Friedman, CEO of salty snack manufacturer Utz Brands said at the Consumer Analyst Group of New York’s annual conference in mid-February.
Hormel Interim CEO Jeff Ettinger echoed this sentiment at the conference, noting that strategic pruning in 2025 – while “hard” – will allow for more balanced growth across the company.
How closures became strategic, not reactive
For years, CPG companies – including Utz and Hormel – opted to grow their businesses through acquisitions, and while an effective way to quickly reach new consumers or enter new regions, this strategy risks spreading companies too thin, so they are unable to efficiently – and sufficiently – support all their brands.
This risk was compounded during the pandemic when consumer demand shifted dramatically – derailing and distorting projections so that long-term needs and potential of acquisitions was more difficult to manage.
In response, several large CPG companies, including Coca-Cola, rationalized their portfolio to focus on a handful of brands and categories where they had permission to win.
This is the playbook from which Utz and Hormel are now tearing a page – but unlike some companies during the pandemic that did it from a place of duress, they are coming from a place of strength.
Utz, for example, in the last three years has delivered 2.4% compound annual growth, held volume share at 8.2% in its core, and gained almost 0.5 points for both dollar and pound share at a time when many other CPG companies are falling behind on all fronts.
The company’s success is rooted in part in its strategic focus on branded salty snacks and de-emphasis of non-branded and non-salty snack business, said Friedman, noting that since the first quarter of 2023 the company has shifted its branded salty business from 82% of sales to 89% by the end of last year.
And yet, Friedman added, “we have a lot more share to gain.”
With ambitions to “outgrow the category by 200 to 300 basis points profitably,” Utz is pursuing a four-prong strategy, one of which is to de-lever and allocate capital more efficiently.
To that end, the company slashed its manufacturing footprint from 16 plants at the end of 2022 to seven today, which freed resources to modernize the remaining plants. The result: average revenue per plant went from about $60 million at the end of 2022 to about $207 million on average in fiscal year 2025. Likewise, network capacity increased from about 55% to more than 80% in the same period, as did productivity cost savings that went from about $22 million to $66 million, according CFO BK Kelley.
He explained the company plans to take a similar approach to boost productivity in other areas of its business, including procurement, manufacturing and logistics.
“Procurement will be a larger area of savings going forward at 45%, with a focus on key initiatives like value engineering and strategic sourcing. Manufacturing savings will normalize at 35% as we complete our supply chain transformation, where we have continuing opportunities in automation and line efficiency. Lastly, logistics between our plants will continue to be an area of opportunity at 20%, with route optimization and innovative planning,” he said.
These efficiencies paired with plans to expand distribution should help the company deliver organic net sales growth that is 2-3% faster than the category with the potential to achieve 17% adjusted EBITDA margins over time, he added.
Hormel trims SG&A and divests hen business
At Hormel Foods, restructuring looks less dramatic but serves a similar purpose.
In the past year, Hormel enjoyed growth even as other CPG companies struggled, but as the year progressed it faced increased headwinds.
“Every quarter last year, we ended up having sales growth, which is nice in this environment, and that’s because of those trusted brands delivering on consumer and operator needs,” said Ettinger. “But the bottom line really proved to be more challenging in 2025 and got actually harder as the year went on. We were facing significant headwinds in raw materials, many of which were up 20, 25, 30%. We also had a couple of operational challenges, a product recall and a fire in one of our plants.”
When all was said and done, he added, “in 2025 and we enjoyed top-line growth, but we did not deliver the bottom line the way the company needs.”
Heading into 2026, the primary goal became to “get the bottom line moving at a commensurate level with our top-line growth. And we didn’t want to just hope to do that. We wanted to take actions in late 2025 that would ]place] us in a better position to be able to have that kind of strong growth in 2026.”
This included reductions in sales, general and administrative costs that Ettinger said were growing more quickly than the top and bottom line.
“We needed that to stop being a headwind and have a chance that maybe that could be a little bit of a tailwind for us. So, we took the hard action of reducing costs in those areas,” he said. “We are reinvesting some of it back into technology and capabilities in that regard and also some of it back on the personnel side.”
Hormel also opted to sell part of its turkey business to reduce its vulnerability to commodity costs, Ettinger announced at CAGNY.
“Turkeys come in hens and toms. You grow hens to the 14-22 pound range, and that’s the Thanksgiving product. Tom turkeys are for all the other products, lean ground turkey, turkey burgers, breast meat for deli or for food service. You grow the toms to over 40 pounds, and you have the efficiencies from that,” he explained.
“We are selling the hen part of the business. We are selling the plant affiliated with that, we’re selling the feed mill affiliated with that, the live production assets as well, and grower contracts that raise hens. The entire tom part is still part of Hormel,” he added.
Hormel strategically reviews brands to focus on those with the most impact
Hormel is retaining the deli meat brand Jennie-O, which Ettinger stressed is “still a big point of emphasis for us.”
However, the company is strategically reviewing its broad portfolio to ensure it invests energy, time and resources “where they will make the biggest difference,” he said.
“We need to make sure each one of our consumer-facing brands has a clear ambition, a clear role, clear strategies, and a big consumer opportunity. As we refresh, renovate, and innovate against these brands, we need to make sure we’re moving where the consumer needs us to move,” he explained.
As Hormel reshapes its portfolio, it also is aligning facilities with value-added platforms. This includes shuttering “a couple” facilities to consolidating manufacturing, and opening a new distribution center and building new manufacturing capabilities for meat snacks, according to Ettinger.
Reflecting on the changes, Ettinger emphasized, “our company has grown over time and we need to continue to focus on a simplification agenda.”
As a result of these changes, the company at CAGNY reaffirmed its fiscal 2026 outlook, including expectations that organic net sales will grow 1-4% and adjusted diluted earnings per share in the 4-10% range.
Hormel and Utz are not alone in downsizing. Tyson Foods also has shuttered plants in recent years as part of a broader successful initiative to improve sales and margins in part by investing in value-added products and modernized manufacturing to create them.
Together, these point to a shared conclusion: growth in packaged food is being rebuilt on fewer, more productive assets.
