Margins to flow from Tyson Foods protein pipeline

Higher margins are in the new product pipeline at Tyson Foods, where executives foresee “expansive opportunities” in all food proteins but especially the chicken business.

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Higher margins are in the new product pipeline at Tyson Foods, where executives foresee “expansive opportunities” in all food proteins but especially the chicken business.

“We’re making a lot of changes in our business and focusing on becoming a more value-added protein-centric branded food company,” said Tom Hayes, president of Tyson Foods.

Saying the company is now only scratching the surface in Tyson brand opportunities, Hayes told investors at the Jefferies Consumer Conference that the company is leveraging protein market insights for new innovative food concepts.

Leveraging insight into consumer demand

In a Nielsen comparison among branded retail food companies, Tyson Foods ranked second in innovation vitality in 2015, generating 12.5 percent of sales dollars from products created in the previous three years. Hayes said that Tyson is committed to driving the demand-generation and product-innovation engine even harder in the future.

“A lot of work goes on to make sure we understand the consumer wherever they are, wherever they eat, when they eat, how they eat, and certainly what they eat ... And we leverage those insights to really powerful brands,” he added.

One line of branded products to be launched is Tyson Tastemakers, which not only taps into the company’s consumer insights but also moves Tyson into e-commerce. It’s a move to add value in the branded beef category – one which retailers often keep non-branded, or store branded, as a price differentiator.


Tyson is looking at other new food proteins, including other meats and non-meats, to add to its offerings, according to Tyson Foods CEO Donnie Smith. 

Tyson Tastemakers is an example of a future product based on the consumer’s desire to be a food explorer, Hayes said. “[It is] a great example of how we leverage the supply-chain expertise [of Tyson Foods] with the demand generation capability that came with the acquisition [of Hillshire Brands in 2014] and [it] is becoming a real leverage point for us.

“We have taken brands from a product positioning to a more consumer-centric emotional connection. For example, Jimmy Dean was a breakfast sausage; it’s all about comfort food now.

"In chicken, we are moving to a space where we like to say, 'let’s keep it real.' It’s real food for real people based on real values. And we are going to get strongly behind the marketing of the whole campaign,” he explained.

More chicken innovation in the pipeline

Hayes and Noel White, Tyson’s president of poultry, stressed the company’s push for higher margins in the chicken segment. Improved pricing mechanisms and continued conversion of commodity chicken to value-added products are keys to tapping higher margins, they said.


Tyson is increasingly focused on value-added chicken products.

White hinted also at innovation coming in chicken packaging. “Chicken has been merchandised in much the same way for literally 50 years, which is in some form in a tray,” he said. “What customers are asking for is for products to be differentiated, whether it’s thin slicing, marinating or different packaging. There’s a lot of work going on around that in the innovation pipeline. So at some point in the future we can expect to see changes in the ways chicken is sold at the retail level.”

Not all new Tyson food proteins to be meats

Not all of the company’s new food proteins will be in the meat category, according to Tyson Foods CEO Donnie Smith. Speaking at the BMO Capital Markets Farm to Fork Conference, Smith told investors that being protein-centric could include the introduction of new non-meat proteins.

“Consumption of meat protein is increasing,” he said, “but so is the consumption of non-meat protein.” Smith pointed to the example of a black bean burger Tyson produces for a quick-serve restaurant. “The consumer demand for those types of items continues to grow, and we are keeping an eye on that because we want to stay relevant with consumers.”


Read more about how Tyson Foods maintains its profitability in the August 2016 digital edition of WATT

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