Hormel, Herdez To Expand Mexican-Food Distribution JV

   DOW JONES NEWSWIRES 
 

Hormel Foods Corp. (HRL) and Mexico's Herdez del Fuerte SA de CV said Friday they will expand on their current joint venture to market Mexican foods in the U.S.

Hormel Chairman and Chief Executive Jeffrey M. Ettinger said the deal will diversify the processed-meat maker's product portfolio and allow it to expand in the Mexican food category.

The meat industry, like many others, has been reeling from declining demand and oversupply, forcing producers, processors and supermarkets to cut production and prices.

The companies have had a joint agreement since 1995 to market the Mexican brands - including Chi-Chis, La Victoria and Dona Maria - but said this 50-50 joint venture would "significantly expand" their pact. The joint venture, to be called MegaMex foods, will have initial revenue of about $200 million, the companies said.

"The collaboration should allow us to better serve both the growing U.S. Hispanic population and the vast numbers of the general population who love Mexican food," Ettinger said.

Herdez del Fuerte Chairman Juan Marco Gutierrez Wanless said the deal will combine his company's products with the manufacturing and distribution strength of Hormel.

The organization of MegaMex is expected to be completed around Oct. 26, to coincide with the start of Hormel's new fiscal year.

Hormel's shares closed Thursday at $34.35 and haven't traded premarket.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; [e-mail]