Tyson's Smith talks new products, opportunities

by Bryan Salvage
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SPRINGDALE, Ark. – Donnie Smith, Tyson Foods president and CEO, addressed a number of topics during the company’s Feb. 3 quarterly media teleconference call. Items discussed included product opportunities in foodservice, new product potential and accelerating the growth of Tyson’s value-added products, as well as Tyson’s position on sow housing.

During the question-and-answer segment, Smith said the “foodservice side does not feel robust” at this time. “There are certain operators that are doing very well,” Smith said. “Quick-service restaurants are driving foodservice sales more so than family [restaurants] and other parts of the channel. But it’s pretty spotty out there. Demand does not feel robust, but it is shifting a little bit and we’re seeing a little bit more feature activity on chicken items, which helps that segment of our business.”

As published on www.meatpoultry.com web news for Feb. 2, Hormel Foods recently committed to phasing out gestation-crate confinement of pigs at all company-owned facilities by 2017, according to The Humane Society of the United States. Wayne Pacelle, HSUS president and chief executive officer, said in the post, “We also urge Hormel’s competitors, such as Tyson, Triumph, Prestage and Seaboard, to stop lagging behind and get on the gestation-crate free pathway.”

When asked about Tyson’s position on sow housing, a Tyson spokesman emailed MEATPOULTRY.com the company’s statement on this topic. “The Humane Society of the United States [HSUS] is once again making a demand that was previously rejected by shareholders of Tyson Foods. HSUS presented a sow housing proposal at Tyson’s 2009 annual meeting and it was overwhelmingly voted down by the company’s shareholders,” the statement said.

Tyson’s statement added that the company has a long-standing commitment to animal well-being and that it’s a part of its Core Values and is why the company has an Office of Animal Well-Being to oversee its animal-handling practices. Tyson supports the pork industry’s Pork Quality Assurance Plus program (also known as PQA Plus), which incorporates pork producer guidelines for animal well-being. “In fact, we currently require all of our hog suppliers to be certified in this program,” the statement relayed.

Tyson buys hogs from thousands of independent hog producers who use a variety of different operating systems, including individual and group housing. Tyson also owns a small hog breeding subsidiary, representing less than 3 percent of the company’s pork production, which also uses individual and group housing.

As noted by the National Pork Producers Council, there is no scientific consensus on the best way to house gestating sows because each system has advantages and disadvantages, according to Tyson. “Like others in our industry, we support the position taken by the American Veterinary Medical Association and the American Association of Swine Veterinarians, which recognize individual and group housing systems as appropriate for sows during pregnancy,” Tyson added. “They note the most important factor is how the systems are managed and the care given to each animal.

“As part of our commitment to animal well-being we will continue to monitor scientific research on animal handling practices, including alternative housing for sows,” the statement concluded.

When asked about growth opportunities within Tyson’s product portfolio, Smith said it was premature to discuss any potential acquisition targets. But in terms of the brand portfolio white space, there are several opportunities.

“We don’t play very well in breakfast, although we are beginning to enter that daypart,” Smith said. “We have new items primarily in the club store channel today called Mini Breakfast Bread Bowls. The launch has gone very well. We’re feeling pretty good about our ability to play in that daypart. So, you’re likely to see more breakfast-type offerings [coming from Tyson].”

Tyson is looking into product diversification and testing moving certain products in foodservice into retail or vice versa. Smith said one diversification possibility would be something like extending Wright brand bacon into dinner sausages. “This is a quick example of white space gaps in terms of product offering opportunities in channels where we’re not deeply penetrated today,” he added. “Convenience stores, drug stores, dollar stores...we think we have opportunities to provide some solutions for some problems that customers have in those areas with our product offerings. [Results thus far] give us a lot of encouragement about our ability to continue to grow our business in these value-added poultry and prepared foods segments.”

One key part of Tyson’s strategy is to accelerate the growth of its value-added categories, he continued. “We have a huge pork business today so we play very well in that...we have great bacon brands, they are able to provide value-added offerings in those types of dayparts or product segments where we may not be as deep today as we could be,” Smith said. “Those are the things we’re looking at in order to accelerate our growth in value-added product offerings.”

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