Tyson Foods: Consumer Behavior Stabilizing Among Pockets of Volatility
Tyson Foods is winning with consumers through its investments in innovation, insights and R&D, according to its president and chief executive officer Dean Banks, on its first quarter 2021 earnings call.
“This performance was driven by higher earnings in our prepared foods, beef and chicken segments, and demonstrates our effectiveness in addressing customer and consumer needs, while continuing to manage the ongoing effects of the global pandemic,” Banks said.
The company’s first priority is safeguarding the health, safety and wellness of its global team members. In fact, the company announced the hiring of a new chief medical officer Dr. Claudia Coplein, in January. In addition, Tyson Foods has hired 200 new nurses and administrative staff, brining its total occupational health staff to almost 600 members. Banks also talked about plans to partner with other medical services providers on testing and vaccines for example.
Since February of 2020, Tyson has also donated nearly 90 million meals to 800 relief efforts in its communities and has pledged to continue to support those local communities where help is needed, while also touting sustainability efforts. It plans to improve its environment footprint while feeding the world.
Like many consumer goods brands currently, Tyson Foods is seeing continued strength in at-home consumption driving historically high retail and e-commerce sales.
“Volumes in core business lines were up nearly 14% during the latest 13 weeks and 19% during the latest 52 weeks. Our growth during these periods was driven in large part by our ability to bring incremental households into our brand and product lines,” said Banks.
Total Tyson household penetration reached 81%, and Tyson is continuing to see an increased number of shopping trips that included its product, up 11% versus a year ago. As consumers increase their reliance on, low to no contact buying methods during the quarter, Tyson experienced e-commerce sales growth of 89% in the latest 13 weeks compared to last year. This equated to approximately $330 million of sales through e-commerce channel partners.
Banks added, “We expect e-commerce channels to remain very relevant, moving forward, as consumers maintain and shift to convenient, low to no contact buying methods.”
As for winning with consumers, Tyson Foods has focused on new innovations as a big part of that strategy. Some new product launches mentioned include:
- Air Fried chicken lines showing great momentum with very strong repeat purchase rates.
- Jimmy Dean’s extension into the breakfast burrito category seeing strong incremental Jimmy Dean volumes from this product offering, as well as solid repeat purchase rates.
- Alternative protein offerings, also under the Jimmy Dean label including the plant-based patty croissant, which is already exceeding the original demand forecast.
"While we've experienced an operating environment that has seen pockets of volatility over the past few quarters, we are starting to see consumer behavior stabilize within the retail and foodservice channels," said Banks. "Our diverse protein portfolio continues to be well positioned to support current consumption patterns."