Executives from Tyson Foods Inc. told investors at the Jefferies 2016 Global Consumer Conference that the company is executing well and selling more branded, protein-centric foods.
“We’re investing in our retail packaged brands, and we’re seeing the payoff,” said Tom Hayes, who was promoted to president of the company last week. “Weekly sales data show that volumes in key categories are gaining momentum,” he said, citingBall Park hot dogs, Jimmy Dean breakfast sausage and Hillshire Farm dinner sausage as examples.
Hayes said a key factor in Tyson Foods’ improved performance in recent years has been higher, more stable margins in the company’s Chicken segment.
Noel White, president of Tyson’s poultry division, said a new business model was needed to achieve satisfactory returns, even in times of commodity market volatility.
“We’ve fundamentally changed how we operate our chicken business,” White said. “First, we optimized our cost structure. We’ve taken more than $1 billion in inefficiencies out of the business since 2009.”
White went on to explain the company utilizes a broad range of customer pricing agreements that serve to minimize the volatility of grain input costs. In addition, Tyson has upgraded its product mix into more branded, value-added items and created the “Buy vs. Grow” strategy of production, significantly de-commoditizing the business. Delivering high quality products and customer service are also key, he said.
“We strive to continually earn the trust of our customers that we will deliver for them, that we will innovate for them and that we will help them grow their businesses,” White said.
Source: Tyson Foods