Tyson's Hayes addresses challenges, opportunities

by Joel Crews
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 Tom Hayes
Future Tyson CEO Tom Hayes tackles the Georgia Dock, acquisition targets and new ventures.
 

KANSAS CITY, Mo. – On the same day when The Georgia Dept. of Agriculture announced it would not report Georgia Dock Prices for poultry “due to an insufficient supply of data,” questions about poultry pricing, leadership changes and acquisition plans were among the topics discussed by Tyson Foods Inc. executives at the Sanford C. Bernstein Consumer Summit on Dec. 7.

Characterized as a “fireside chat” by Tyson, the discussion was ignited almost immediately with an opening question from analyst Alexia Howard to the company’s president, Tom Hayes about Tyson’s role in a pending antitrust class-action lawsuit alleging chicken price fixing and collusion that also implicates Sanderson Farms, Pilgrim’s Pride, Koch Foods and Perdue Farms. Hayes said he expected to be asked about the situation. 

“I would have been amazed if that question didn’t come up. It’s a hot topic here lately,” he said, calling the situation somewhat of a tempest in a teapot for Tyson. Hayes said while a minimal amount of the company’s business is based on Georgia Dock pricing — about 4 percent or less — the allegations have been sensationalized by some media outlets and he considers such reports “an attack on our integrity as a company and we take it personally.” He said time spent discussing the Georgia Dock is a shame because it is a non-factor in Tyson’s business.  

“We have publicly said, through the media, that we have signed an affidavit that says our pricing practices were absolutely clear and accurate in the past, and they are absolutely clear and accurate going forward. So as it pertains to our business, it’s a small portion. It has a lot of attention today, it’s unfortunate, but, for us, we feel great about the position that Tyson is in,” Hayes said.

He added that the resolution of the lawsuit will likely take considerable time.

“We’re anxious to defend ourselves in court. We feel like we’ve got a great position. We’re very happy with what we do at Tyson Foods and, in no way are we going to back off of what we have been historically,” he said.

Hayes also discussed growth in the company’s natural and antibiotic-free products. He iterated that the company is committed to eliminating antibiotics that are important to human health throughout its food-supply system by the end of 2017 realizing consumer demand for antibiotic-free (ABF) meat and poultry products is growing. He pointed out that while Tyson offers a “no antibiotics ever” line and that segment is expanding rapidly, it is growing from a small base. He added that the company would not rule out an acquisition in this segment.

“We’re always open to acquisitions to help our position. I think that would be excellent,” he said.

On the topic of some of the new business segments Tyson has invested in, Hayes said partnerships like the one with Amazon Fresh, to deliver meal kits, Tyson Tastemakers, to consumers’ homes shows promise. Offering delivery of precooked meals or raw products for consumers to finish preparing,  has exceeded expectations.

“The success has been remarkable so far,” said Hayes. “Everything that we’ve produced, we’ve sold out of.”

With the recent announcement of Donnie Smith’s retiring from his position of CEO at the end of 2016 and  with Hayes named as his successor, questions about his immediate goals were addressed. The incoming CEO said some of his general plans include a continued commitment to innovation, increasing transparency and looking for the next acquisition.  

“One of the things I think you will see differently from us in the future than in the past is more proactive approach to sustainability. We know that the conscious consumer today wants more transparency than we’re giving, and we are up for the challenge, and we feel like that, as a leader, we need to take that space aggressively,” Hayes said.

“You’ll see us focus a lot on innovation,” he added. “That should be no surprise, but the innovation pipeline is full, and we have lots of opportunities to spend again. So be prepared for some great new products to be hitting the market and we’ll be excited to talk about. And I’d say just in general we want to continue to invest against the business in the right way. We have a very strong base to work from, and we’re going to make strategic investments in order to grow, and don’t be surprised if we pull in an acquisition or two.”

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