Smithfield Foods Inc. on Friday announced a joint venture agreement with Kansas City Sausage Co. aimed at expanding into the fast-growing breakfast sausage and dinner sausage business.
“This is a big opportunity for Smithfield to grow in two categories that have not historically been a focus for the company,” said C. Larry Pope, president and chief executive officer of Smithfield Foods.
Packaged breakfast and dinner sausages generate $4 billion in sales annually to retailers and food service companies, according to Smithfield.
The financial terms of the 50-50 partnership were not disclosed.
Smithfield expects the cash transaction to be completed in the fourth quarter of its 2013 fiscal year, pending regulatory approval. Pine Ridge Farms LLC, a sister company of Kansas City Sausage, is also part of the venture.
Kansas City Sausage, which is one of Smithfield’s largest live sow customers, has annual sales of around $200 million.
“We’ve been able to observe Smithfield Foods for a lot of years,” said Justin Hanlon, chief operating officer at Kansas City Sausage.
Kansas City Sausage, headquartered at 8001 N.W. 106th St. near Kansas City International Airport, is a sow processor and large sausage producer for private labels.
It has 50 employees here and more than 500 at Pine Ridge Farms in Des Moines.
Pine Ridge was formed in 2004 and produces boneless hams, raw materials for sausage and other products. A decision to expand into the private label sausage business led to the opening of Kansas City Sausage’s operation here in April 2009.
The plant here is one of the most modern sausage processing facilities in the nation, Pope said.
Smithfield, a $13 billion global food company based in Smithfield, Va., is one of the largest pork processors and hog producers. Its packaged meat brands include Farmland, Smithfield, Armour, Eckrich, Curly’s and John Morrell.
It bought Farmland Foods in 2003 during the bankruptcy liquidation of Kansas City-based Farmland Industries. Farmland Foods still has large operations here.
Smithfield said it will merge Kansas City Sausage’s operations and products with Smithfield’s brands and sales and marketing team.
John Stadler, founder and chairman of Kansas City Sausage, said he was “excited to partner with the largest packaged pork company in the U.S. to grow our business.”
Hanlon added: “We’re looking forward to increasing our volume, and more volume usually means more jobs.”