Talking Strategy with O.B. Goolsby
President and Chief Executive Officer, Pilgrim’s Pride Corporation

Q: What are the business objectives for the current fiscal year?
A: The primary focus is satisfying consumers who have a growing appetite for quality poultry products in a number of market areas – including foodservice outlets, restaurants, and retail grocery chains. We expect to maintain our double-digit growth in prepared foods business in the year ahead, driven by favorable consumer and demographic trends, our improved product portfolio, and enhanced operating efficiencies. We are seeing the benefits of pursuing a growth strategy around our prepared foods segment, which grew more than 25 percent over the past fiscal year. EggsPlus, which is a much, much smaller segment of our business, continues to grow in sales and has a strong consumer appeal because of the healthy aspect of Omega 3.
Q: Describe your overall vision for growing Pilgrim’s Pride, indicating how you see the company evolving.
A: These four goals override everything we do:
• Continue to be a preferred supplier to our valued customers.
• Keep focused on strategic growth.
• Remain in the top quartile of our industry in operating efficiencies.
• Create value for our shareholders.
Q: What is the major issue tied to reaching these goals?
A: There are many, but they all revolve around satisfying our customers by staying focused on our growth strategy and continuing to find synergies with the ConAgra integration. There are many others, but these are the chief areas of focus.
Q: Does the growth strategy include additional acquisitions? What makes an ideal acquisition candidate?
A: It is our company policy not to comment on acquisitions until there is something to report. That being said, however, we do believe that the industry as a whole will continue its consolidation path over the next three-to-five years, just as it has in the past three-to-five years.
Q: What marketplace trends currently impact the company’s business decisions?
A: I’d rather spend time talking about a trend that is gratifying. It is truly gratifying to continue to see the increasing acceptance of chicken as a healthy, convenient meat protein. Last month, the National Chicken Council (NCC) reported per-person consumption of chicken increased 6 percent to 87.1 pounds in 2004. At the same time, the NCC forecasted an increase of an additional 2 percent – to 88.6 pounds – in 2005. The growth in chicken has outpaced that of other meat proteins at an amazing rate.
Q: Describe Pilgrim’s Pride’s relationship with key retailers.
A: Our stature in the foodservice industry gives us a uniquely privileged vantage point from which to identify emerging consumer trends, significantly enhancing our ability to respond quickly to new developments as they begin to materialize. We will use this stature to continue to expand our retail presence throughout the United States as our product availability is now truly coast-to-coast. We are excited about the growth opportunities that exist for us in the retail sector and expect to pursue them aggressively in the coming months, just as we have done in the foodservice sector.

Turkey marketing strategies
Finalizing the sale of its Hinton, VA, turkey production facility, in 2004, positions Pilgrim’s Pride Corporation to move forward with restructuring its turkey division under the leadership of industry veteran Robert A. “Bob” Wright as executive vice president.  
The sale of the facility – completed in September – to the Virginia Poultry Growers Cooperative Inc. represents the final step in the previously announced plan to restructure the Pilgrim’s turkey division – born with its 2001 acquisition of the VA-based WLR Foods’ chicken and turkey business, comprising four processing facilities.
 Detailing expectations related to the sale, O.B. Goolsby, president and chief operating officer, cited a positive impact on Pilgrim’s pre-tax earnings of up to $30 million per year; reduced working capital employed in the turkey division by approximately $50 million; and decreased commodity sales in the turkey division by approximately $70 million per year.
The restructuring measure was no surprise, however, given that officials earlier acknowledged concerns related to challenging turkey-industry conditions. To offset vagaries tied to uncertain market pressures, Pilgrim’s adopted to move toward more cost-effective operations and a shift to value-added, higher-margin turkey products. To that end, the company introduced a Signature turkey line, representing the industry’s first premium lineup of butter-basted turkey products produced at its New Oxford, PA, facility.
“Our new line is getting a good trade response from some of our largest customers, and will get its first large-scale consumer exposure this holiday season,” Goolsby says. “We have seen particularly strong interest in our new Petite Butter Basted Turkey product, which weighs in at seven-to-nine pounds. This portion size offers the consumer greater preparation versatility.”
Value-added turkey products now represent two-thirds of the overall mix with one-third comprised of branded fresh and frozen products.
“This is consistent with our broader strategies for both turkey and chicken,” Goolsby notes.
 Wright, who joined Pilgrim’s Pride, in 2003 bringing more than 20 years poultry-industry experience, is responsible for leading the charge in executing growth strategies for Pilgrim’s turkey division.
Moreover, his responsibilities broadened with his appointment as the company’s executive vice president of sales and marketing in June 2004 covering both chicken and turkey. Wright says there are no plans afoot for a new direction concerning Pilgrim’s sales and marketing initiatives. He does see opportunities within distribution channels, however, such as the Top 10 restaurant chains, club stores, and Pilgrim’s existing customer base.
 “The opportunity will be to find ways to work better across these channels,” he says. “If our customer is in retail, how do we so sell that customer retail items? Perhaps it’s as simple as selling a five-pound bag instead of a ten-pound box. We must constantly ask ourselves how we can better work with customers.” Thanks to its WLR and ConAgra acquisitions, Pilgrim’s customer base is extensive, spanning most geographical areas and channels of trade. “We are not solely retail, chill pack, and foodservice,” Wright emphasizes. “Our strategy is to marry these segments, blurring the lines between them to expand our customer base. That means we can sell multiple products and different types of products across all our channels.” Wright says the ConAgra chicken division acquisition continues to yield unforeseen benefits.
“One thing that I think surprised us is that the marketplace recognized Pilgrim’s Pride as a major player so quickly,” he says. “People in the market began actively seeking us out due to our new size and scale.” NP