The Van Trump Report

How an Uneducated Hide Trader Built One of America’s Most Successful Independent Meatpacking Companies

Hormel Foods is probably most famous for its novel canned meat product “SPAM” which gained worldwide popularity during World War II. The company, founded by George A. Hormel in 1891, had a long history of innovation before that product made them a household name, though, guided by Hormel’s business mantra, “Originate, don’t imitate.” By the early twentieth century, his company was one of the largest independent meatpackers in the Midwest and Hormel himself one of the richest men in America.

Hormel was born in Buffalo, New York in 1860 to German immigrants. They moved to Toledo, Ohio when Hormel was still very young. His father had opened a modestly successful tannery but the family’s prospects were wiped out by the economic depression following the Panic of 1873. Hormel, who was only 13, was forced to quit school and get a job. He ended up in Chicago by age 16, where he worked at his uncle’s meat market. He left there at 19 to briefly try his hand as a wool buyer in Kansas City but soon returned to Chicago where he worked as a traveling hide buyer.

In 1887, one of his customers Austin, Minnesota, mentioned he was looking to get out of the meat market business. Seeing it as an opportunity to go into business for himself, he borrowed $500 and partnered with the owner’s son, Albrecht Friedrich, to buy the market. They ran the  Friedrich and Hormel meat market until 1891 when the partnership was dissolved, with Hormel’s desire to expand clashing with Friedrich’s satisfaction with what they had already built.

Hormel used the money from the meat market to open his own pork packinghouse just outside of town in an old abandoned creamery. Established in 1891, he established the Geo. A. Hormel and Company and made several strategic moves in order to compete with the big Chicago packers-Armour, Swift, Morris, Wilson, and Cudahy. He later wrote in his unpublished autobiography, “I kept constantly before me the challenge: ‘Originate, don’t imitate!’ and made it one of the key commandments of the organization.”

One of Hormel’s earliest and most significant business decisions was the adoption of the “direct buying” model. At the time, the meatpacking industry was in the earliest days of a seismic shift that was moving away from the centralized model of terminal stockyards and processors in a single location (like Chicago) to a model of decentralized “direct buying.” In this model, small packers located their operations in small cities and purchased livestock directly from farmers, eliminating the need for large terminal stockyards. Hormel was one of the first meatpackers to use the direct buying method, but others soon followed.      

The decision to specialize in pork was also a calculated strategy. During his years operating the meat market, Homel had kept careful records of each animal processed, tracking every carcass and the pieces of meat sold from each. He realized pork had the greatest profit potential, since every part of the pig carcass could be used in some way. Sausage increased the profit earned on each hog because it utilized parts of the animal that would otherwise go to waste. As such, the company’s first and only product for many years was sausage.

Hormel also brought on his two brothers and other members of his family, which allowed him to step away from the day-to-day operations and focus on management. In 1899 Hormel spent $40,000 to upgrade his facilities, building a new refrigeration facility, new pumps and engines, an electric elevator, smokehouses, and a hog kill. In 1901, the company was officially incorporated. It also acquired several acres of adjacent land, and two years later it constructed additional facilities such as a casing processing room and a machine shop. Between 1902 and 1905, the number of hogs slaughtered increased from around 42,000 to nearly 134,000.

During this period of expansion Hormel also worked to refine and improve its products. In 1903 it registered its first patent, “Dairy Brand,” with the U.S. Patent Office. In 1905, George Hormel traveled to England to establish the foundation for an export business, which by the end of World War I constituted about a third of the company’s yearly volume. In 1915 Hormel began to produce several lines of dry sausage under the names of Cedar Cervelat, Holsteiner and Noxall Salami that proved particularly popular with ethnic consumers.

In an effort to increase sales volume, Hormel sent salesmen outside of Austin to set up branches and distribution centers. By 1920 the company operated branches in Minneapolis, Duluth, St. Paul, San Antonio, Dallas, Atlanta, Birmingham, and Chicago. By the outbreak of World War I, Geo. A. Hormel and Company slaughtered over 300,000 hogs annually and the company had become one of the largest independent meatpackers in the Midwest.

When World War I hit, Hormel expanded its labor force and the hours it worked to help satisfy the increased demand for meat both at home and abroad. The company also employed women for the first time. When Hormel’s son Jay returned from serving in the war, Hormel turned over more control of the daily operations to him. It was at this time that Jay discovered that the company’s assistant controller had embezzled over a million dollars over the previous ten years.

The embezzlement scandal provided George Hormel with additional incentives to professionalize his company. He did so by arranging for more reliable capital management, by dismissing unproductive employees, and by continuing to develop new products. The new focus was followed by a decade of substantial new product development that included the nation’s first canned ham, Hormel® Flavor Sealed Ham, Dinty Moore® Stew and Hormel® Chili in 1935, and what came to be the company’s most famous creation, SPAM®, in 1937.

George also retired during that period in 1929, when he handed the reigns of the company to his son, though the senior Hormel was still on the board. In 1942, George and Jay established The Hormel Foundation to act as trustees of the family trusts. The Foundation funded the Hormel Institute at the University of Minnesota, which was initially started to study the food value of soybeans.

During World War II, the Hormel Company became a “war facility” and once again increased its meat production. By 1945 Hormel was selling 65% of its total production to the U.S. Government. SPAM became the staple of U.S. servicemen throughout the world; in 1941 Hormel was producing 15 million cans a week, and the government was distributing it under the lend-lease program. Since its introduction in 1937, over eight billion cans of SPAM have been sold worldwide.

George Hormel died on June 5, 1946, in Los Angeles, California, at the age of 85. Hormel Foods says that his instruction to “Originate, don’t imitate” still leads the company’s innovation efforts today.

1 thought on “How an Uneducated Hide Trader Built One of America’s Most Successful Independent Meatpacking Companies”

  1. A really powerful and inspiring story and the quote at the end speaks volumes.
    The more I learned the more convinced I became that before I could tell another man what to do and how to do it, I should have to first find out for myself

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