"Smithfield condemns the use of offensive and discriminatory language and behavior of any kind. Therefore, we are terminating our partnership with Paula Deen," the company said Monday in a statement to CNBC. "Smithfield is determined to be an ethical food industry leader and it is important that our values and those of our spokespeople are properly aligned."
Court documents revealed the food celebrity—famous for high-calorie Southern cuisine—has used racial slurs and tolerated discriminatory jokes in her various business dealings. Deen has since posted three online video apologies. Fans, meanwhile, are flooding social-media outlets to defend their queen of Southern cooking.
Smithfield's decision to ax its partnership with Deen comes after the Food Network on Friday dropped Deen, and said it would not renew her contract, which expires at the end of this month. Her cooking shows have been a staple on that network for years—in which fans watched her fry butter and use donuts for hamburger buns, hamburger included.
(Read More: Paula Deen's Fans Take to Social Media to Defend Her)
Deen's Empire Worth an Estimated $6.5 Million Annually: Analyst
Marshal Cohen, chief industry analyst for The NPD Group, estimates Deen's empire to be worth around $6.5 million annually—which includes her retail and contract revenue.
Beyond her food network contract, Deen has product deals with many companies from big pharmaceuticals to big-box retailers. Deen's name is associated with a diabetes drug by Novo Nordisk. Deen previously disclosed she suffers from diabetes.
Deen's vast product deals also span a who's who of retail—Macy's, Sears, Wal-Mart, JCPenney and QVC (owned byLiberty Interactive). Many of those companies are now evaluating their relationships with the well-known chef.
In a statement to CNBC, Paul Capelli, QVC vice president of corporate communications, said: "QVC shares the concerns being raised around the unfortunate Paula Deen situation. QVC does not tolerate discriminatory behavior. We are closely monitoring these events and the ongoing litigation.
"We are reviewing our business relationship with Ms. Deen, and in the meantime, we have no immediate plans to have her appear on QVC."
Sears Holdings tells CNBC they are "currently exploring next steps as they pertain to Ms. Deen's products."
Bad Celebrity Behavior in a Digital Age
As companies address the Deen situation, the public jury on her racial comments is still out.
Americans' willingness to forgive celebrity misconduct often depends on whether the transgressions occur in the particular field the celebrity "plays in," said Eric Martin, a partner at branding firm Boost Partners.
"Tiger [Woods] rebounds, as does Manti Te'o, in a way that Lance Armstrong or Pete Rose never will" because the misconduct by Rose and Armstrong was in their respective industries, Martin explained.
"Martha Stewart's insider trading conviction was far enough outside her field of celebrity that she could reemerge," Martin said.