Interactive Case Study

The Issue: Hickory Farms' Smokin' Turnaround Plan


Hickory Farms, known for holiday gift baskets loaded with sausages, hams, and cheeses, realized it was trying to be too much to too many people, and as a result, was losing favor with consumers. Between 2005 and 2008, sales at the Maumee (Ohio) company slipped nearly 30%, to $128 million, down from $180 million.

Soon after taking charge in October 2007, CEO Mark Rodriguez initiated a three-year plan to reorganize the company, streamline production, and improve brand perception. He aimed to eliminate $20 million in costs.

The former chief executive of Atkins Nutritional saw three main problems: Hickory Farms had not invested substantially in marketing or advertising since 1999. There was little coordination between business units. And consumers were disoriented by the company's sprawling offering, which had grown to 2,500 different products.

Premium PositionFollowing years of expansion, Hickory Farms had lost sight of its strength: premium foods and specialty gifts. Rodriguez set out to reclaim that reputation.

First, task forces were set up to analyze sales channels and customer behavior and assess stock-keeping units and suppliers. The company worked with branding agency Woods Witt Dealy & Sons in New York and with packaging and point-of-sale partner Tailford Mitchell in Toledo to invigorate the brand.

Hickory Farms discovered it had not evolved with the times in terms of visuals, descriptions, packaging, and recipes. To address the issue, it has poured $6 million since January 2008 into consumer research and design, a new photography library, replacing old packaging materials, a revamped Web site, and advertising.

Part of the redesign is a new logo that underscores the company's history, dating from 1951. "Hickory Farms is a brand linked to some of the most positive memories many of us have—family holiday celebrations," says Rodriguez. "This emotional bond can make it particularly powerful during difficult times."

To emphasize environmental stewardship, Hickory Farms updated its packaging to use more recycled content and eliminate 94% of the plastic sheets inserted in gift boxes and product displays. It also got rid of metallic foil boxes, as producing them resulted in by-products that could not be recycled or renewed. Mailings were reduced, and catalogs were condensed to cut paper consumption by 76%, or 875 million pages, in fiscal 2009.

Consumer AdsAccording to the company's surveys, the new brand aesthetic is preferred three to one over the former design.

Communicating the company's philanthropic activities, the inside cover of gift boxes now includes a message about the company's efforts with Share Our Strength, an organization that aims to end childhood hunger.

The Web site, which will help drive future sales, was reorganized for an easier shopping experience. "We expect our Hickoryfarms.com business to grow at an accelerated rate," says Rodriguez. This holiday season, in its first consumer advertising campaign since 1999, the company will take full-page ads in food and lifestyle magazines.

To help achieve the $20 million in cost reductions, Hickory Farms eliminated redundancies and slashed the number of products to 300, allowing the company to streamline the number of suppliers it uses by 65%. "The company doesn't have the space to maintain that number of products or the budget to properly educate consumers on their benefits," says Rodriguez.

He also decided to halve the executive committee. to five people, reduced the number of employees to 100 from 235, and outsourced certain functions in order to focus on client and customer relationships.

The upshot: These reductions also resulted in a 13% reduction in the retail price of Hickory Farms products—certainly a welcome change for consumers this holiday season.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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