Tyson Foods – Strategic Update & Traditional Protein
Resilience – 30 March 2021
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Specialist:
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Stacy Wright (SW)
Former Director, Sales at Tyson Foods Inc
Agenda:
1. Beef, chicken and pork demand outlook
2. Alternative meat innovation and shifting consumer behaviours towards processed meat
3. Tyson Foods' (NYSE: TSN) rising commodity costs and labour challenges
4. Value-add product innovation opportunities
5. Mid-term growth and profitability outlook
Contents
Q: Could you give an overview of the meat processing industry? What are the main drivers and who are the
top competitors in the market?
Q: Besides new start-ups hitting the market at a rapid pace, what 2-3 pre-coronavirus trends were you
tracking in the industry?
Q: Could you give an overview of Tyson’s meat business and the different categories that it operates in?
Q: Taco Bell made a partnership with Beyond Meat. Do you know why Tyson wasn’t able to secure that type
of retail business?
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Q: What are the coronavirus impacts on Tyson’s business? What is its biggest takeaway from coronavirus? 6
Q: Tyson’s management talks of high input cost inflation. How does this inflation differ across the various
businesses and categories? Which segments would you say had better pricing power that could help offset
some of that margin pressure?
Q: How sustainable might some of the inflationary pressures be? What is driving input cost?
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Q: How quickly could the food service sector recover, and how agile do you think Tyson’s distribution
capabilities are to meet the demand within that channel? Are there any costs that might be associated with
assessing the whole production price line?
Q: Could you discuss the regulatory environment regarding chicken and the price fixing?
Q: Could you elaborate on the reasons why Tyson had some weakness in chicken?
Q: How would you assess Tyson’s overall performance in beef? It’s doing well, but what are some of the
drivers around Tyson’s beef business and what advantages does it have in that group?
Q: What are your thoughts on private label and its impact on beef and chicken?
Q: As consumers limit their consumption of red and processed meat, which contributes 70% of Tyson’s
sales, what implications does this have for the long-term capability of Tyson’s business model? What is
Tyson doing to adapt to that shift in consumer behaviour?
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Q: Could you elaborate on the split consumer and the trend of health and wellness and what it means for the
processed meat industry? Like you said, some may say they’re vegan, but their eating habits don’t necessarily
match. Could you elaborate on this health and wellness trend and how that goes hand-in-hand with meat
consumption?
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Q: What would you say are some additional drivers of the alternative meat industry, and how quickly are
consumers shifting to this new category?
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Q: Is there anything the investor community should know regarding Tyson’s management team and ability
to execute on priorities? What is your best- and worst-case scenario for Tyson over the next six months?
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Tyson Foods – Strategic Update & Traditional Protein
Resilience
Transcription begins at 00:00:00 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Tyson Foods, Strategic Update and Traditional
Protein Resilience. I am Nyree Hinton and I will be facilitating today’s Interview with Mr Stacy Wright, former
Director of Sales at Tyson Foods.
Stacy, before we get started with today’s Interview, please state I agree or I disagree to the following
statement: You understand the definition of material non-public information and agree not to disclose any
such information, which is confidential, during this Interview.
SW: I agree.
NH: Yes, thanks. Could you begin with an introduction of your background and previous roles in the
industry?
SW: I started at Tyson in 1991 in the Food Service Division, calling on Sysco Foods, down in Houston, Texas,
and worked on the food service segment, calling on restaurants, schools, hospitals, that whole area, from 1991
until 1994. In 1994, I sold two of the largest retailers in the country at the time chicken for the deli and,
because of that, Tyson said, “We’re going to start a deli division.” In 1994, we started the Deli Division and ran
that division all the way up to until my retirement last March from Tyson, so served that in a variety of roles,
but basically took a start-up company, or a start-up division in a company from, our goal was USD 1m a week
in sales and, when I retired, we were at about USD 1.5bn total. That’s what I’ve been doing, or what I had been
doing.
[00:02:09]
Q: Could you give an overview of the meat processing industry? What are the main drivers and who are the
top competitors in the market?
SW: Really, the landscape has narrowed considerably with the big players. Smithfield, JBS, Tyson, Cargill,
Hormel, I’m probably forgetting one or two, but those are the big players in the space today. They’re also all
competitors in some form or fashion to Tyson, because Tyson plays in all those proteins where Smithfield, for
example, participates in very little chicken business, but are the largest pork producer in the world, I believe.
Those are the big players, and then I would say the top competitors in the space right now are all these little
start-up Shark Tank companies coming after niches of the business through that, or they had been starting
doing it and then, with COVID, kind of put it on steroids, partly because a lot of people were out of work, and
having to come up with creative ways to make it work, and then also in the food space during COVID, as you
all know, people had to get real creative real fast in the food service and the retail sector.
NH: I love how you put it, the Shark Tank companies, because every day there are some new company I’ve
never heard of before hitting the news cycle.
SW: I was just going to say, it’s amazing, the trade shows, before COVID, were just becoming proliferated with
Shark Tank companies. I live down here in Fayetteville, Arkansas, and Walmart has vendor days where Shark
Tank companies just come in for weeks at a time and present their wares. The great thing is, people are
wanting to do it, or are wanting to look at it. It’s just kind of a treasure hunt too though. A lot of dreams get
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dashed real quick.
[00:05:02]
Q: Besides new start-ups hitting the market at a rapid pace, what 2-3 pre-coronavirus trends were you
tracking in the industry?
SW: Pre-COVID, really, and I’ll just take it from the consumer, the consumer proved that they wanted to
cook, and what I’m going at is, you saw a proliferation of meal-kit companies come out before COVID and
even during COVID. I think it probably helped them, or at least helped, because the consumer wants to cook.
However, what we found out was that the consumer didn’t know how to cook. We’ve missed a whole
generation of moms and dads teaching their kids how to cook. They still wanted to feel like they were doing
something, so putting together these meal kits at least let people feel like they were preparing a meal and
making something from scratch, if you will, and then just taking the cue from that. I know what I did, and
what we did in our Deli Division was we really tried to make that deli section a meal takeout centre, so to
speak, to where you might have a rotisserie chicken, but you might have Minute Maid Rice sitting there right
beside it, and then a loaf of French bread, so you could pair and make your meal, kind of create your own meal
kit, so to speak. The one thing we did find out on the meal kits was, somebody might not like green chillies,
and that just takes a whole segment right out, so simplicity was very prevalent. You’ve got to keep it simple.
The meal-kit guys you saw, a lot of them did not survive or are failing because they made it too complicated to
where you’re sending a meal kit, but it had 17 packages that you had to open and you’ve got to keep it to about
three or four to make it effective. That was one trend, it definitely was pre-COVID. Post-COVID, I don’t know
if I can talk about that. If I can, I will, but I think post-COVID, you’ll see it more, but you’ll probably see some
more players in it and you’ll see more components come out of it, like I described earlier, to where you’re
going to walk up to a section in a store and you’re going to be able to pick what starch you want, what protein
you want, what vegetable you want to where you can make your own meal kit, so to speak.
That’s one big trend that I see before and after, and I’ll go ahead and start on the next one that might be more
in the food service end, but also the retail is figuring it out too, and that’s drive-through, drive-through and
kerbside. That’s where you saw the guys do really, really well during COVID, were the guys that could
effectively get people through the drive-through quickly with their meal hot, their meal with the right items,
and it’s everything in a timely fashion, so that, you saw. Then, with the guys that didn’t have drive-through, the
ones that did really well were being creative on their kerbside and their takeout. Of course, I don’t need to talk
about DoorDash and all those guys, because they definitely did well, but I’ll talk about them a little bit from
the fact that, with restaurants opening back up, you’re going to see DoorDash possibly, or some of them, slow
down a little bit on the delivery. It’s not going to be the doomsday that everybody thinks, because people have
got used to people coming to them. Translating over to the retail segment, takeout in groceries now, that is
going to be here to stay forever, because the parent coming home that has three kids, or two kids in the
backseat, and if they can pull into a stall and somebody open up the trunk of their car, put their product in,
they don’t have to get the kids in and out of the car seats or even through the parking lot, that is a true, true
benefit for the consumer that they weren’t really jumping on it pre-COVID, because they were still able to just
run in and out of the store and that was part of their habit, but when COVID came on, it made it a habit for
these folks that they had to go do it and now it’s just a way of life.
Plus, the other thing is, the retailers have got a lot better at executing it well as well also, like I talked about,
the right order and all that, that’s where the retail was really failing, plus, of course, your perimeter of the store
gets a hurt a little bit on that too, and when I say perimeter, I’m talking about your produce, your deli, your
meat case, dairy a little bit, and cheese a little bit, definitely the gourmet artisanal cheeses get affected by that,
but they’ll figure that part out too, because a lot of that is impulse buy, but a lot of it, the one trend that is
going to continue pre-COVID and post-COVID is people are still going to shop at the grocery store. The
grocery store is going to be here to stay not matter what. Through a pandemic, whatever, people are going to
shop. They’re not going to go to Kohl’s or Penneys or Target or some of those places, and they might not ever
go back to some of them, but they’re going to go back to the grocery store eventually, so that would be another
big trend, people have got to figure out the drive-through and the kerbside.
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Really, probably the last thing, and I don’t know whether this will translate into the trends or not trends, but
on your food service and in your deli food service sector, you’re going to see a lot more food where, before you
saw food bars, salad bars, those types of things, where food is just open and out there. You’ll still it in certain
parts of the country, in certain chains, you’ll still that, but you’re going to see a lot of that go away, which will
turn it into a packaged food, so to speak, to where you’ll go up to a food bar, and before you just got to pick up
your own wings, you’ve got to pick 12 wings, now those 12 wings are already going to be in a container for you
made beyond that bar ready for you to go that signify fresh, but it’s still going to be a packaged good. That
might be good or bad for the retailer, and then for the consumer, it takes the thinking away from them for
having to choose what they’re going to do, because the 12 wings are already there for them, but it might not let
them say, “I don’t know how long those wings have been sitting there. I know those ones that I usually get are
fresh, because I can see them steaming, and all that. Those wings in that package, I don’t know.” That part
remains to be seen, and really, I guess if there’s a takeaway on it, would be packaging. Packaging pre-COVID
and post-COVID are going to be probably different on how they look, and that’s because of the health aspect. I
haven’t seen a lot of that yet, of people figuring out the packaging part of it, but I’m confident somebody will.
[00:14:33]
Q: Could you give an overview of Tyson’s meat business and the different categories that it operates in?
SW: Tyson operates in beef, pork, chicken and now alternative meats with their Raised & Rooted brand.
That’s primarily the protein segments they operate in, and then, as far as when they segment out their
customers, they’re in really everything. Tyson really has been traditionally a food service company. The thing
that COVID showed Tyson was that they could be nimble and could react in plant opportunities, where a plant
might be making a five pound bag of wings for Wegmans, for food service, but they’re like, “Hold on,
Wegmans isn’t going to do wings right now, but they’re still going to sell wings in the store. Maybe we can do
them in a two pound bag or a two-and-a-half pound bag in another section of the store, or even in the deli,
because they are packaged, because you’re going to buy 12 wings, I don’t know if you’re going buy five pounds
of wings every time. I hope you do, but I know I’ve got a better chance at you if I have a little smaller pack size
for you.” That has helped Tyson shift and really operate, but where they operate, where I was going was,
schools, hospitals, really anything, anywhere somebody is going to eat something, Tyson is going to be a part
of that. You go through the drive-through at McDonald’s, Tyson is part of it. You go to Wawa and get a
breakfast sandwich, Tyson is going to be in that store. You then go to Wegmans for lunch, Tyson is going to be
there. Stop off at the convenience store again on the way home, Tyson is going to be there, so Tyson really is in
every segment that there is a need or even, I forgot to mention, Tyson is a huge, huge player in prepared foods
with tortillas and tortilla chips. They’re Taco Bell’s largest chip supplier in the world, or were. I don’t know if
they still are or not, but at one time, they were. They’re much in those segments, and when they get in in those
segments, they’re making sure they get the share of the stomach in every single place where protein is sold.
[00:17:57]
Q: Taco Bell made a partnership with Beyond Meat. Do you know why Tyson wasn’t able to secure that type of
retail business?
SW: It’s either Beyond Meat or Impossible. It was one of them. I know Impossible was with the Burger King
folks, and I think Beyond Meat struck a deal with MacDonald’s, didn’t they?
NH: Yes, they sure did.
SW: I would say this, Beyond Meat and Impossible, and this is strictly Stacy Wright speaking, Beyond Meat
and Impossible, that’s what they started out doing, again, two start-up Shark Tank-type companies that, more
than likely, got embedded with those large accounts early on, not to say that Tyson isn’t embedded with those
accounts as well, but Tyson already has a share or a considerable share of business at each one of those
accounts that Impossible or Beyond might be in, and Beyond and Impossible, I’m sure, even though we had
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geniuses working, were ahead of us with the IP. They were able to get in with those large accounts that have
their own R&D staff and folks and they’re able to jointly come up with some items. Everybody had skin in the
game, that’s the way those guys operate. I’m sure Tyson got in on it, but if I had to guess, Tyson was late to the
game, is why they didn’t get it. The great thing about Tyson is, they wake up real quick and they don’t like to
lose, and so be looking for something to come down the road somewhere, somehow with somebody on that,
but that would be my guess of why Tyson didn’t get it. They were just late to the game on a couple of those
projects.
[00:20:41]
Q: What are the coronavirus impacts on Tyson’s business? What is its biggest takeaway from coronavirus?
SW: The big takeaway is it flat killed their food service business. Tyson being primarily food service, whereas
a lot of the other companies weren’t so much skewed food service, it really hurt their food service business
from a production standpoint. Retail, thankfully, carried everything else and were able to convert, but you just
can’t convert all those folks. It affected the food service business adversely big time. On the good side though,
retail did real well, and then, through COVID, beef did real well, whereas chicken got hurt a little bit, pork was
up a little bit, but beef did real well, and that’s a big generator of revenue for Tyson.
[00:22:19]
Q: Tyson’s management talks of high input cost inflation. How does this inflation differ across the various
businesses and categories? Which segments would you say had better pricing power that could help offset
some of that margin pressure?
SW: Where you can have better pricing power or more flexibility or more insulation, let’s say it that way,
insulation against competition or insulation against market factors would be in that prepared food segment. I
did talk about chips, but also, on that prepared foods, you’re doing pepperoni, you’re doing processed meats,
some of those items where, on that side, really, on pepperoni and chips, for example, there might not be the
competitive pressure from other factors coming at you, and I’ll bring up chicken. Chicken gets really hurt in a
commodity segment when there’s inflation coming on it from the fact that a lot of people will flock to chicken,
no pun intended, but a lot of people will go to chicken to buy it, and then the chicken guys will produce so
much that they just drive down the margins themselves, they compete literally against themselves because,
with inflation, people are looking to spend their money wisely, so you’ll see chicken go up in sales, but you
won’t necessarily see the margins there, because the chicken guys are greedy and they think if they produce
more, they can make more, which doesn’t always work that way.
On the beef side, the inflation will affect it a little bit just from the fact that people won’t go out. You saw it a
couple of years ago, a part of it wasn’t so exasperated because there wasn’t a lot of supply out there from the
beef side, but several years ago, they had USD 6.99 ground beef out there, and it was still selling, just not at
their big time amount, and so inflation will affect your higher-dollar cuts of meat, the rib-eyes, T-bones, those
types of things. Those will get affected in a high inflation deal. Pork is the wild card. Smithfield, which is
owned by China, and I haven’t heard much about it lately, but the African swine fever that came through that
was going to take all the herd of all the hogs of all the world forever and hog prices were going to go sky high
and all that, and you did see pork consumption go up, but you also saw a record number of hogs come to
market. Supply has stabilised, and you’ll see some trade-off in an inflation society from beef to pork, but then
pork is competing against chicken, the other white meat, so then you’ll see some trade-off back and forth, but I
would say in inflation, just to summarise, inflation-prepared foods will give you a little bit better insulation
from margin compression. Beef will definitely be affected, chicken, sales will be up, the profits might or might
not be up, and that’s all dependent on their input cost on that part, and then pork, I just talked about.
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[00:27:06]
Q: How sustainable might some of the inflationary pressures be? What is driving input cost?
SW: What’s driving the input cost is corn and soy. Corn, real easy. You’ve got corn, last time I looked, it was
up 47% over a year ago, and 65% of a chicken’s input cost is the feed, and that primarily is soy bean meal and
corn, so that’s what going to affect that. Is it a short-term event? It usually is. On crops, it’s all dependent on
Brazil, the US, China is getting into it now a little bit, Russia is doing some, but it’s all cyclical on the inflation
on pricing in input cost on protein. Is it a short-term even? Yes. It’s all dependent on what comes out of that
ground every year, and when I say that, it’s more of a global deal now than it was even 10 years ago with Brazil
figuring out how to farm, with getting some infrastructure around them to where they can actually get the crop
produced, but they can actually get it out of the field now and to the feed meal, so that part is the wild card on
the input cost itself. Barring a drought, it should stabilise somewhat.
[00:29:22]
Q: How quickly could the food service sector recover, and how agile do you think Tyson’s distribution
capabilities are to meet the demand within that channel? Are there any costs that might be associated with
assessing the whole production price line?
SW: Food service is going to recover. Tyson’s agility is going to be crucial on this. They definitely have the
distribution, but, with COVID, it’s opened the landscape, like I talked earlier, from these smaller companies
that might be able to be more agile, might be able to be quicker reacting to customer’s demands. We talked a
little bit about why Tyson might or might not have got the Beyond Meat stuff, who knows, but maybe it was
not being able to be agile. The profitability part comes in of, Tyson will lose business, but Tyson will get
business back, and usually they can get business back when the other guy stumbles, because he can’t meet
demand or he can’t meet delivery, service and quality, when he can’t meet one of those two things, or if he’s
priced at a place where Tyson is able to go in and negotiate better pricing cost savings for that. Where it can
hurt profitability is, Tyson might have to take a sale at a lower profitability that might be below the range that
they want to make, so that can happen, especially if Tyson lost any business through the food service deal to a
competitor, not just to stagnation.
[00:31:21]
Q: Could you discuss the regulatory environment regarding chicken and the price fixing?
SW: I don’t know a lot about it, other than, I know you got into a litigation society, you got into a society
where you had rural America, small-town farmer complaining about corporate farming coming in, “Corporate
farming is telling me to do this, telling me to do that,” and so, in this society, that gained steam. I think I’ve
read where it’s moved into other segments. I think I saw something on another food item that they were
talking about price fixing, and then I’m sure they’re going to talk about whatever else is out there commodity-
wise, maybe where bid-type pricing is needed or what they’re looking at, so I would say the chicken one was
something that they investigated, found some chicken on the bone, so to speak, and dealt with them. Like I
said, I think it’s gone into other segments now too to see what’s going on in other segments. Not necessarily
food segments that I’m thinking about, but I know I’ve seen stuff on that, so it is what it is on that part.
[00:33:50]
Q: Could you elaborate on the reasons why Tyson had some weakness in chicken?
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SW: I think a lot of it is, Tyson has not done well in the retail tray pack segment from a service point of view,
and, with that, you’ve got razor thin margins, and if you don’t have the sales to back that up through your
traditional tray pack or your traditional plants that should be doing that, if they’re not operating at full
capacity, you’re going to take a big-time hit. I would think it was probably, and I didn’t look at the sales from
the last quarter, so this might be true or might not be, but I think the sales had stagnated. Definitely, they’re
down, I’m sure, on chicken because of food service, but I don’t think retail, other than picking up some of the
packaged product in the retail case, I don’t know that retail picked up a lot of meat case business, and that
meat case business keeps your plants going, or keeps them going profitably. As far as what’s the outlook on
domestic chicken demand, it’s going to stay strong. Like I talked earlier, in this economy, people will go to
chicken when times might get a little tough on the pocket book of, “What do I buy to feed the family?” Chicken
is always one that hangs in there, so it’s going to be fine. I don’t know where Tyson is going to stand at the end
of the day on their percentages share because of that.
Also, going to the next one, if that’s alright, as far as the profit expectations, they did spend a lot of money to
improve operations, and I know they’re spending a lot more money now on AI to improve operations too that
probably they weren’t planning on, then COVID made them do it. Some of the inefficiencies with Tyson is,
they’re real good at dictating to the customer what they want to sell, and that doesn’t always fit well if the
customer doesn’t want to buy that, so that creates inefficiencies, because if Tyson says, “No, we want to sell
this,” and they can’t find a buyer for it, well now they’re dumping it and they’re selling it at a price that’s not a
good fit for them. Something that also hurts Tyson on their inefficiencies is, if they’re inefficient in one
segment of their business and they’re dealing with a customer that’s buying that particular protein in that
segment, they might analyse Tyson on that particular item. They’re going to say, “Yes, I’ll buy more chicken
from you when you get your deli lunch meat figured out.” That was just a side light on that.
How does Tyson differentiate themselves in the segment? Tyson is very, very good with R&D, very, very good
with R&D. Tyson’s problem is they’re too slow. A lot of times, by the time Tyson comes out with something,
that trend might already be out in the marketplace. They’re going to hit it right on four or five of those trends
that they’re going to start on their own, but some of the trends, they’re not going to be out, so R&D, Tyson
differentiates themselves in that sector. The other way they can differentiate themselves also in chicken is they
have a very good logistical network. They’re usually pretty close to their customers, and then they’ve also been
able to come up with extended shelf life, which is basically vinegar added to a solution. That increases the shelf
life of a chicken that, instead of getting 14 days from kill, you can get anywhere from 21 to 28 days, depending
on the item, and no discernible taste or anything that the consumer even knows, and it’s vinegar, so it’s all
natural as well, and they need to declare it on the label as well. Tyson has done a great job of differentiating
themselves there. Why is that important is it lets them go coast-to-coast with their chicken, so they might be
able to produce product in Mississippi, but with added shelf life, they can get it to California even on a three-
day ship, or to New York, to Wegmans on a three-day ship and it still will have enough shelf life that Wegmans
is happy with to where actually the Perdue chicken that was produced right down the road for them, it might
have the same shelf life remaining as the Tyson chicken produced in Mississippi. Actually, the Tyson chicken
might have more shelf life on it because of the added vinegar in that item.
[00:40:45]
Q: How would you assess Tyson’s overall performance in beef? It’s doing well, but what are some of the
drivers around Tyson’s beef business and what advantages does it have in that group?
SW: Part of the reason, and this is pure speculation, but part of the reason was Tyson had that plant down for
a lot of the years, so that created more demand for the supply that was remaining, so more demand equals
higher pricing, so that helped them on that, and I’m referring to the plant fire in Holcomb, Kansas. I don’t
know if that was 2020 or 2019 now, but now that that thing is coming back up, their guidance for 2021, they’re
bullish on beef because of the economy. Their supply is good, unlike chicken, their efficiencies are very, very
good in beef, and they have a good line of sight on supply, and then very good at balancing supply to meet
demand. Their competitive dynamics within the segment, it’s real easy, it’s the alternative meat thing that’s
going to be part of the competition, more protein, people getting more creative with the cuts will help keep it
fresh.
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[00:42:52]
Q: What are your thoughts on private label and its impact on beef and chicken?
SW: Private label is here. The customer is comfortable with it, as long as it as recognisable label within that
footprint of the store. Wegmans, for example, they put “Wegmans” on their chicken, that’s fine. If they put
some other funky brand on there, maybe not, it might not play, so it depends on what your brand is on the
private label in the chicken and beef. It’s more than just slapping a label on there, so to speak. You’ve got to
have a story around it as well. Where private label has emerged in the retail segment, for sure, because if you
want best choice or some store brand on green beans, that’s still going to be there, but in that meat segment,
with the private label and national brand label, a lot of it is one company doing both on that as well, so you’ve
got a lot of that going on too, so there are synergies there that you can work to. It depends on who is the threat
to. Is the threat to the consumer? No. Threat to the national brand guy? Maybe a little bit, because he’s going
to lose maybe a point or two on his margins, but the supermarket is going to benefit, and then, of course, the
protein guy will benefit too, because at least he’s not losing all the sale from national brand if he can have the
store brand as well.
[00:45:08]
Q: As consumers limit their consumption of red and processed meat, which contributes 70% of Tyson’s sales,
what implications does this have for the long-term capability of Tyson’s business model? What is Tyson doing
to adapt to that shift in consumer behaviour?
SW: Tyson has been big on the idea of the flexitarian. That’s the person that, they think they’re a vegan, but
then they’re also like, “I can’t always get anything vegan, or I can’t get anything vegan that might taste good,”
so you’ve got a lot of these folks saying, “I’m a vegan. Vegan is cool,” but then when it comes down to eating
habits, they might not eat healthy as they say they are in public. I would say Tyson’s stance is, they’re going to
go at it more from, “We’re going to get the flexitarians.” The pure vegan customer, that’s going to be a very
small percentage of the pie, so you’ll let the Gardeins and those guys go get that business, but what Tyson will
do is create a category out of this alternative meat space and it will be in that flexitarian using half meat, half
plant-based protein, and still providing what that consumer is looking for, but also trying to define that
category, or try to redefine that category to what Tyson wants it to be, because it’s almost contradictory. You’re
talking out of both sides of your mouth if you’re going to say, “We’re going all in on alternative protein. We’re
shutting down every beef, chicken, pork plant we have. We’re all in.” You just can’t do that, so Tyson is having
to, I think, really create a category.
[00:47:51]
Q: Could you elaborate on the split consumer and the trend of health and wellness and what it means for the
processed meat industry? Like you said, some may say they’re vegan, but their eating habits don’t necessarily
match. Could you elaborate on this health and wellness trend and how that goes hand-in-hand with meat
consumption?
SW: Maybe on the processed meat thing, when I see that, I’m seeing lunch meat, the hams. The ham, turkey,
that category, they’re on the processed meat thing, so with that, on the health and wellness, and you’re starting
to see low sodium, no sodium, gluten free, fat free, 97% fat free, that type of thing, so they’re trying to cue on
all the health notes that they can’t on processed meat. It’s more on the consumer trend of, again, health and
wellness, they’re wanting to eat healthy, so if I see gluten free, all of a sudden I’m eating healthy, or if I see low
sodium, all of a sudden I’m eating healthy, so I feel good about myself. In the processed meat industry, that’s
what you’re seeing. The Smithfields, the Hormels, the Boar’s Heads, those folks, they’re really trying to queue
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in on those cues that they can, gluten free, low sodium, those types of things, because it is still processed meat,
but you can take some nuggets out of each one of those.
[00:50:10]
Q: What would you say are some additional drivers of the alternative meat industry, and how quickly are
consumers shifting to this new category?
SW: I would say the additional drivers, you and I talked about that one earlier on the Beyond Meat with
McDonald’s and the Impossible Burger at Burger King that’s been out there for a while, that is going to drive
it, because really it’s consumer awareness. If you get it in a menu on every McDonald’s or every Burger King
across the country, or Taco Bell even, you get it on one of those three folks, that’s a lot of facings you’re going
to get quick and a lot of awareness. That’s going to drive folks to that. They’re going to go buy it at McDonald’s,
they’re going to go start looking for it in that grocery store case if it tastes good. The one thing I will say about
alternative meat, you saw during COVID that the consumer is not ready for it yet, because you saw pictures at
Wegmans, I think I saw one from there, I know I saw one from ShopRite up there, was empty meat case, the
only thing left was some Beyond Meat patties, so that stuff, the consumer is not quite ready for it, but the
demographic, it’s the young people driving that demographic, but the consumer, they’re going to shift. It’s not
going to be quick, it’s going to be slow. I would be curious to see what year two on the Impossible Burger sales
look like at Burger King to see if they’re still rising or if they’re just stagnated, or if they’re even going down. I
don’t know. I know the further and further I got away from the coast, the less and less I would hear about the
Impossible Burger, meaning the middle part of the United States, so it’s going to take a little while.
[00:52:47]
Q: Is there anything the investor community should know regarding Tyson’s management team and ability to
execute on priorities? What is your best- and worst-case scenario for Tyson over the next six months?
SW: As far as their management, they’ve got good management in there. They know what they’re doing. The
key for Tyson is staying focused and executing on what their tasks are at hand. They tend to sometimes get lost
from reality as far as the rubber hits the road here. We need to be put out in the field making stuff happen,
rather than dreaming up fluffy clouds of stuff that might work, might not work. They still need to stay focused.
As long as they do that, they’re going to be fine. For the next six months I think you’ll see good stuff out of
Tyson just from the sheer fact that they’re going to get the majority of their food service business back from
just the consumers coming back, so I’d be pretty bullish on their sales. Their profitabilities and their
efficiencies, it’s all going to be dependent on them and how well they can execute down to the plant and down
to the sales and the customers and all that. As long as they can get back in there, they’re going to be fine, but I
believe there will be more people trying to get business in the food sector than ever before, because we’re back
in this society where people are a necessity. They’re inventing stuff because they have to now. You’ve got a lot
of people out of jobs, a lot of people said, “I’m not going back to the corporate job. I’m going to figure out
something to do.” Some will, some won’t.
[00:55:18]
NH: We will now end the Interview on that note. Let me close by saying thank you, Stacy, for your input, and
thank you, clients, for joining Third Bridge Forum’s Interview today. Clients, if you wish to peak with our
specialist in a private call or meeting then please let your relationship manager know. Goodbye.
SW: Thank you.
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Transcription ends at 00:55:29 of the recorded material
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