Tyson Foods’ presentation at the Consumer Analyst Group of New York conference Feb. 20 made one thing clear — While Tyson Foods’ core business may be in meat proteins, management views Tyson as a food company, an enterprise focused on accelerating growth in a variety of categories outside the meat space.
“We play across beef, pork, chicken, of course,” said Thomas P. Hayes, president and chief executive officer, during the company’s presentation. “We are also playing across plant-based protein. You've seen a lot of that, and I’m sure there’s going to be some questions about it. But we are openly disrupting ourselves to continue to drive to the next level of improvement and next level of advantage for us and our shareholders.”
Sally Grimes, president of Tyson’s Prepared Foods business, said the unit’s operating margin during the first quarter of fiscal 2018 was 11.9%, ahead of the same period last year and the highest on record for the segment.
“Prepared Foods is over an $8 billion value-added food business, growing volume double digits and expanding operating income percentage,” she said. “Just four years ago, this was a $3.3 billion business with 3% margin that generated about 7% of Tyson’s EBIT. Today, it’s over 25% of total Tyson EBIT. So Prepared Foods is helping transform total Tyson through the stability and higher-margin profile of this brand-centered, value-added business.”
To maintain the Prepared Foods momentum, Ms. Grimes outlined how the company tiers its innovation process and how management is looking beyond meat and into new categories. Three objectives for the company’s Prepared Foods management team is to modernize Tyson’s billion-dollar brands, create tomorrow’s iconic brand, and identify new growth models.
Innovation on tap from the company’s largest brands include Jimmy Dean Eggwiches, which Ms. Grimes called Tyson’s “breadless breakfast platform.”
The company also will be adding a morning snack to the Jimmy Dean line this year.
“(These are) hard-boiled eggs, natural cheese and Jimmy Dean meats,” Ms. Grimes said. “They require no prep, and they deliver over 50 grams of protein.”
Tyson Foods introduced Jimmy Dean Simple Scrambles in 2017 and the velocity of the items was 50% higher than the company’s forecast, according to the company. In 2018, Tyson Foods will be extending the line with the introduction of Egg White Scrambles.
Businesses under Tyson’s “creating tomorrow’s iconic brands” tier include Aidells sausage, Hillshire Snacking and Golden Island meat snacks. Ms. Grimes said Hillshire Snacking generated $100 million in sales at retail and the company will introduce an “upscale fondue experience” under the banner in 2018.
“Now a key reason that Hillshire Snacking has been so successful is that it offers an experience beyond what you'd expect from a snack,” she said.
New growth models highlighted during the presentation included a plant-based protein snack line and a new product created from food waste.
Green Street is the plant-based protein snack brand that will be introduced by the company later this year. It features grab-and-go bowls that will be merchandised in the fresh deli department.
“We felt like this was an opportunity from a portfolio strategy perspective,” Ms. Grimes said in a follow-up interview. “We already have a nice presence in deli meats and rotisserie chicken, and sometimes a salad does not do it for a consumer.”
Green Street products will feature such ingredients as quinoa, lentils and chickpeas in chef-inspired flavors, Ms. Grimes said.
Mr. Grimes also unveiled Yappah during the presentation.
“Now this is a term that originated in the Andes,” she said. “It means that little something that a merchant may give away at the farmers market to use up the day’s inventory so nothing goes to waste. And, so, our first launch, we’re using what goes unused in the food supply chain, and with those as ingredients, developing a line of protein snacks.”
The core ingredients in Yappah will be pulp that goes unused by fruit juicing operations and spent grains from beer processing and chicken.
“Between the spent grains and the pulp we asked what can we do with this?” Ms. Grimes said. “We wanted to add our own protein, so we added chicken, and came up with an idea around a new snack.”
The company will be launching the new product on the crowdfund web site Indiegogo, get feedback and then do a more formal launch later this year.