As I sat down to start my work week, I realized that I didn’t eat a single hot dog over the holiday weekend to celebrate the 250th birthday of America.
Instead, I sat at Otto’s Pub and Brewery in State College, PA, with my gluten free Beef on Weck and birch beer float. I would easily argue that my meal celebrates American culture, but it’s not the gold standard for the holiday.
The National Hot Dog and Sausage Council estimates that Americans consume roughly 150 million hot dogs on the Fourth of July alone. And that’s just a slice of the 7 billion hot dogs eaten during the “hot dog season” of Memorial Day to Labor Day.
Now, hot dog preference seems to be as polarizing as what toppings actually belong on them. But the near unlimited options is probably why Americans eat so many.
I’m a fan of Teton Waters Ranch 100% beef hot dogs. But I also won’t say “no” to a Bar-S hot dog off my brother’s Blackstone grill while chasing his three toddlers around the backyard.
Neither of “my brands” are publicly traded, so I continued my search for an opportunity to profit from America’s summer hot dog fixation.
Checking the Stats
I was honestly curious about which brands dominated this food category. Bar-S is in fact the highest selling by pack volume.
Ball Park Franks lead the market in total revenue hitting over $500 million annually. These hot dogs are part of the Hillshire Brands family which became a Tyson Foods (TSN) holding in 2014.
TSN is one of the largest meatpackers in the world, producing roughly 20% of beef, pork, and chicken sold in the US. It’s a company that I’ve followed for many years because of its market dominance in a consumer staples category.
Tyson pays a $0.51 quarterly dividend and has increased the payout for the past 14 years. But, its current 3.4% yield just isn’t high enough for me to want to add the company to my portfolio.
What about the hot dog with the most recognizable branding and jingle? That would have to be Oscar Mayer owned by Kraft Heinz Company (KHC). How many other brands have a fleet of hot dog shaped vehicles?
Unlike Tyson, Kraft Heinz also sells many of America’s favorite hot dog condiments. KHC has a massive family of brands from Jello to Velveeta, and from Cool Whip to A-1 Steak Sauce. You can find its products in just about every aisle of the grocery store. I would normally say this vast exposure is a reason for owning KHC… but right now the inner aisles of the grocery store are struggling.
KHC has faced quarterly declines in its North American volumes for almost five years. The company is in a strategic pivot with some positive signs, but it’s just not a journey we should jump into at this time.
