The King Of Pork: How Smithfield Foods Became A Giant
Posted by Gaby Wallace on October 31st, 2018
Smithfield Foods is a giant in the pork industry. In 2006, it was determined that Smithfield was 1 of the 4 companies responsible for 70% of the hog production in the United States. This business did not originate overnight; its tale of success is marked by extensive growth over a long period of time.
The financial success of Smithfield Foods can be attributed to its aggressive business acquisition model. Between the years 1981 and 2008, Smithfield Foods bought out over forty competitors. This strategy would be the crucial gear in their expansion. By continuing to buy out other livestock suppliers, they were able to eliminate competition to their product, increase hog output through their acquired facilities and gain an overall larger market share. The United States Agriculture Department eventually called this company absurdly big. In 1992, they opened the largest hog production facility in the world. By 2008, it was clear that this strategy had led Smithfield Foods to financial success.
How did they grow to the point of being able to buy out another competitor? It all started with Joseph W. Luter Sr. when he opened Smithfield Foods in 1936. At that time with his son, he was only able to sell 15 hogs a day. From 1936 until the time to their first acquisition in 1981, Joseph W. Luter Sr. focused on building his business though increasing their daily hog output. In 1966, Smithfield Foods increased their production from 15 to 3,000 hogs per day. By 1970, their output was up to 5,000.
Smithfield Foods is also largely a family owned business. The first general manager and salesman were father and son. Eventually when Joseph W. Luter Sr. died in 1962, Joseph W. Luter III took over his position. He was studying at Wake Forest University but decided to postpone his studied to help the family business. Joseph W. Luter III would prove to be another crucial key to the financial success of Smithfield Foods.
Joseph W. Luter III managed the company well and sold it in 1969. This company fired him in the following year and ran into a million-dollar debt by 1975. Joseph W. Luter III was contacted to see if he would accept regaining a position in the company to fix the crisis. He accepted, and Smithfield Foods began buying out competitors in 1981.
His son, Joseph W. Luter IV was involved with the company's growth as well. From 2008 to 2013, Joseph W. Luter IV held the position of executive vice-manager. He formed the company in the last phase of its life until the Chinese corporation, WH Group, bought out Smithfield Foods for an unprecedented .72 billion dollars. He resigned in 2013 after the buyout with stock totaling million dollars.
Smithfield Foods increased their business through good business management and an aggressive acquisition strategy. From Joseph W. Luter Sr. to Joseph W. Luter IV, the company remained firm in a gradual increase of yearly hog production. When their facilities reached hog production capacity, they simply bought out another competitor.
