Smithfield Foods spins off European arm to sharpen packaged meat focus in diverse markets

28 Aug 2024 --- Pork heavyweight Smithfield Foods is separating its European operations as it eyes better opportunities for both businesses. Smithfield Foods and Morliny Foods, which previously formed Smithfield Europe, will remain subsidiaries of the China-based pork giant WH Group.

The separation follows the parent group’s announcement last month to spin off its wholly-owned Smithfield US and Mexico subsidiaries and make them public in New York, US.

“It’s the right time to establish our North American and European operations as stand-alone businesses empowered to execute distinct strategies addressing different market environments and opportunities,” says Shane Smith, president and CEO of Smithfield Foods.

“In doing so, we provide our respective management teams with increased decision-making agility, optimizing the performance and prospects for each business.”

The company expects to make strides in North American markets by building packaged meats shares through enhanced product innovation, recognizing consumer price points, continuous optimization of its operations and “investments enabled by stable cash flows and a strong balance sheet.”

Region-specific growth

In North America, Smithfield Foods has a majority stake in Altosano, previously known as Granjas Carroll de México, a joint venture in Mexico and a prominent fresh pork supplier in the region. 

Morliny Foods has adopted a “region-specific growth strategy” for Europe, whose market dynamics differ from that of North America.Meanwhile, Morliny Foods focuses on sustainable production of packaged meat and fresh pork and poultry products for global markets. It operates in Poland, Romania, Slovakia, Hungary, Spain and the UK and has now adopted a “region-specific growth strategy” to address a more fragmented European market with different market dynamics than in North America. 

“We will benefit by being a nimbler competitor with a focused strategy addressing the European food market,” says Luis Cerdan, CEO of Morliny Foods. 

“We are confident this step will accelerate growth opportunities for our people and our company.”

Business moves

Smithfield has been fuelling its growth strategy in the value-added packaged meats segment, which includes the purchase of a dry sausage production facility in Nashville, Tennessee, (US) from Cargill last month.

The move added a dry sausage production capacity of 50 million metric pounds per year to its business and is expected to support the meat supplier’s existing portfolio of dry sausage brands, including Margherita, Carando and Armour.

Smithfield debuted its soy-based meat in 2019.Besides working with pork and hog meat, Smithfield has previously ventured into the plant-based protein space with a soy-based protein portfolio under its Pure Farmland brand. The move aimed to tap into the rising meat reduction trends worldwide.

In 2022, the company came under fire from a US congressional investigation that accused meatpacking companies and the USDA of forcing factory workers to remain in facilities with a high risk of coronavirus transmission during the early days of the pandemic.

“To date, we have invested more than US$900 million to support worker safety, including paying workers to stay home and have exceeded CDC and OSHA guidelines,” Jim Monroe, Smithfield’s VP of corporate affairs, told Food Ingredients First at the time.