Tyson Foods' ‘multi-protein, multi-channel strategy’ pays off, amid consumers trading down

“We are very pleased with our Q3 results that really demonstrated the focus on the multi-protein, multi-channel strategy, and specifically, we are in an environment where the benefits of our chicken, prepared foods and pork business can offset the headwinds that we are experiencing in our beef business,” said Tyson CFO Curt Calaway during a fireside chat.  

He added, “We have been very much focused on [controlling] the controllables, and that very much is focused on operational execution, but really across the entire business, as we have managed very diligently our cash flows, working capital [and] CapEx across the board, and ultimately enabled us to have a great result.”

Last week, Tyson announced Calaway will step into the full-time role of CFO, following a stint as its interim CFO. Calaway was brought into the CFO role following the previous CFO and Tyson heir, John R. Tyson, was arrested on alcohol-related charges in June. John R. Tyson is still an employee of Tyson but "is currently on health-relative leave," the company stated in a press release​.

‘We continue to see segments of consumers search for value’

Tyson’s portfolio of various meat products, including pork and beef, allowed the company to capitalize on changing consumer behaviors, namely trading down, Calaway explained.

“[We] continue to see segments of consumers search for value, whether that is in retail or foodservice, [and] ... we see private label continuing to pick up a little bit of share,” he said. “The benefit of our strategy is being multi-protein, where we can play across all the different protein channels. We can play across the different foodservice and retail environments, and we can also participate in all the dayparts.”

Consumers are not only trading down to private label, but they are trading out of higher price meat categories, like beef into cheaper meats like pork and chicken, as “demand for chicken has been very strong," said Brady Stewart, group president of beef and pork and chief supply chain officer at Tyson. 

Tyson shuffles manufacturing capacity to support chicken, poultry growth

As part of focusing on business fundamentals​, Tyson streamlined its manufacturing network, including closing six chicken facilities in 2023 and two corporate offices, to shore up its free cash flow, which was $1.1 billion in Q3 2024.  

More recently, Tyson closed a pork facility in Perry, Iowa, and laid off 1,200 employees amid ongoing “network design changes,” Stewart explained.

“[The Iowa plant closure] gives us better capacity utilization and efficiencies in our existing assets. We feel good about the way our assets are running today, we have seen sizable improvements over the last 12 months just relative to efficiencies, relative to conversion rates as well,” Stewart said.

He added, “Having said that, there is still a great opportunity that sits in front of us to improve. And there is an improvement plan for us to continue to improve those operations [and] make sure we are managing the mix appropriately as well. And then lastly, I think, from an enterprise standpoint, we will continue to prioritize capital that provides us the greatest amount of return within the business.”

Tyson also opened several new facilities, including a bacon plant in Bowling Green, Ky., earlier this year, which helped the company drive performance in that category, Calaway explained. The 400,000-square-foot facility is estimated to produce 2 million pounds of Jimmy Dean and Wright Brand bacon for retail and foodservice channels a week, Tyson shared in a press release​.

Tyson opened a new fully cooked chicken plant​ in Danville, Va., last fall and opened several international plants, Calaway said.

“There is a lot of spend that has occurred within our existing facilities to continue to streamline and automate and bring forward our operational excellence agenda that have really enabled that. And that has been one of the catalysts that enabled us to transform from [2023 to 2024] performance,” he elaborated.