Tyson Foods executives say the chicken segment of their company is thriving, and they are optimistic that increased focus on value-added poultry products will be a key component to the company’s growth.
With present challenges in the company’s beef and pork segments, the chicken segment is helping pick up the slack, Tyson Chief Operating Officer Jim Lochner said during a presentation at the Bank of America Merrill Lynch Global Agribusiness Conference. “There’s a really good value in being diverse,” Lochner said, because generally when one segment experiences negative trends, another moves in a positive direction.
“We see actual stronger demand for chicken products,” said Lochner. “The market data tells us chicken is probably stealing demand from beef.”
Since beef prices are moving upward, many consumers are simply moving toward chicken, which is more affordable.
“The American consumer hasn’t really deviated much from proteins. They’ve shifted their buying patterns to a better buy,” Lochner said.
The chicken segment is vertically integrated, with Tyson owning everything from the feed grains farms and baby chicks clear through the finished poultry product, which also helps its bottom line. In its pork and beef segments, it buys much of its livestock to be processed.
In 2013 and beyond, Tyson looks to expand its production of value-added chicken and prepared food products, said Tyson Chief Financial Officer Dennis Leatherby, who also spoke at the conference. The aim is for sales of value-added products to increase by six to eight percent.
One product at the forefront of the company’s value-added product offerings is Nature Raised chicken, which was produced out of the demand for antibiotic-free chicken. No antibiotics or animal products were added to the feed of Nature Raised birds, which has earned third-party animal welfare certification and has been USDA process certified.
Well aware of the global population growth and increased protein consumption for residents of countries that are improving economically, Tyson is looking to fill those food needs.
Lochner noted that global protein production has already grown by more than 450 percent in the past 60 years. In 40 years, he added, the world will need twice as much food than is produced today. The company is examining ways to improve efficiencies that will allow it to grow more with less units.
But Tyson is still looking at growth in its overseas operations, with Leatherby mentioning improving its sales by 8 percent to 12 percent in China, Brazil, India and Mexico. The company is investing more in operations in those countries, and particularly in China, where it is building company-owned farms to ensure food quality and safety.
Growth through acquisitions
Tyson announced in February it has purchased the assets of Don Julio Foods, based out of Clearfield, Utah. Don Julio, a maker of flour and corn tortillas, potato chips, tortilla chips and pretzels, sells products to retailers throughout the U.S. under the Don Julio Authentic and Clover Club Brands.
The newly acquired line should be a good fit for Tyson.
“We’re glad to have Don Julio as part of the Tyson team, and this should be the first of what we anticipate to be a series of small acquisitions that will help us grow our prepared foods and value-added poultry business,” Leatherby said.