Smithfield Foods has agreed to purchase a Cargill dry sausage processing plant as it looks to profit from growing consumer tastes for value-added meats such as pepperoni and cold cuts.
The Nashville, Tennessee, factory can process up to 50 million pounds of dry sausage per year. The plant is set to bolster Smithfield’s portfolio of foodservice and retail brands, including Margherita, Carando and Armour.
Terms of the deal were not disclosed. The sale is set to be completed by the end of July.
The retail dry sausage category is expected to grow by $2 billion over the next six years, Smithfield said, fueled by strong demand for pizza, sandwiches and charcuterie.
“This transaction is a testament to our continued focus on growing our packaged meats business by staying ahead of and delivering on our customers’ preferences,” Steve France, Smithfield’s president of packaged meats, said in a statement.
Smithfield plans to make formal employment offers to all 160 Cargill Nashville employees for the same positions they currently hold. There will be no changes to their current base pay, according to the Virginia-based pork company.
“We look forward to serving this facility’s existing customers and welcoming a new group of team members to Smithfield Foods,” France added.
In recent months, Cargill has been offloading its production assets to generate cash flow. The Minnesota-based food giant struck a deal in May to sell a California facility to the state’s largest beef producer. It also sold off eight grain facilities to agriculture cooperative CHS with an early June closure date.
Cargill used to employ about 270 workers at the Nashville plant, but laid off more than 100 people in February. It transitioned the site’s “cooked crumbles” operations to facilities in Nebraska and Texas, but kept the remaining employees in place for pepperoni production.
“This was a challenging decision given its people impact,” Cargill spokesman Chuck Miller wrote in an email at the time. “However, we are confident in the care and support we are providing, as well as that it is the right move to make for the future of our business.”
