A Message from Joe Luter, IV

Dear Smithfield Foods Employees,

In recent letters, Larry, Bo, and Dennis have written about strategy, vision, sustainability, and financial performance of Smithfield.  In this edition, I will share some insight on customer expectations of us as a strategic supplier. The days of "what's your price", and "is your product quality acceptable", while still relevant, are only two components in our customers' buying decisions. Other key decisions are listed below.

CATEGORY MANAGEMENT: We have leadership position in a number of categories including smoked hams and bacon. Our customers expect us to help them maximize their sales of these categories by recommending sku assortment, promotional activity, and pricing strategies for our products, and, in some cases, our competitors' products.  We have developed a talented group of people in our sales organizations to provide this analysis, allowing us to develop deeper relationships with our customers.

PRODUCT INNOVATION: All customers expect us to bring new products to market.  New products could include existing products in new, consumer friendly packaging like Smithfield's new bacon package, line extensions like Eckrich Angus smoked sausage and Armour cheese pepperoni, or flavor enhanced products like Farmland's marinade fresh pork roasts.

CORPORATE SOCIAL RESPONSIBILITY: As an organization, our five core areas of focus(environmental performance, animal welfare, food safety, employees, and community) are very important to many of our customers.  We have become strategic suppliers to some customers because of our CSR program and expect our leadership role in this area to benefit us for years into the future.  Your commitment to this program is important and appreciated.

MARKETING SUPPORT: As we evolve towards a consumer packaged goods company, our customers expect us to support our brands with consumer advertising and promotions, helping them "pull" product off their shelves as opposed to relying on them to "push" product to the consumer thru price.

RISK MANAGEMENT: Price volatility and uncertainty are greater today than any time in our company's history,  creating challenges for our customers.  Through our risk management team, we offer fixed price Programs and market forecasts for up to one year in advance.  Customers place great value on this added value service.

In summary, Customer demands and expectations are evolutionary.  As a leader in the pork industry, we must evolve with them and WE ARE.  Our sales and marketing teams across our IOCs are respected and well positioned to meet  the growing demands of our customers.

Thanks to all!

Joe IV