Tyson Foods has made several recent moves as it continues to reposition its business focus towards protein and sustainability.
On June 1 the company announced the divestment of its Sara Lee frozen bakery and Van’s businesses to private equity firm Kohlberg & Company for an undisclosed amount. Through the deal, Kohlberg & Company will also acquire Tyson’s prepared food facilities located in Tarboro, North Carolina and Traverse City, Michigan, as well as a Canada-based sales office. All 1,160 employees associated with these sites are expected to remain in place under the new ownership.
“These are great assets with outstanding team members; however, we’re focused on expanding Tyson Foods’ leadership position in protein,” said Sally Grimes, Group President, Prepared Foods. “We believe these brands and facilities will do well as part of Kohlberg, which has extensive experience buying and growing businesses.”
The announcement also included news that Kohlberg will be partnering with consumer products executive veteran C.J. Fraleigh, who will assume the role of executive chairman upon completion of the deal.
“With established and iconic brands, including Sara Lee, Chef Pierre, Bistro Collection, and Van’s, this business is well-positioned to continue its historical growth trajectory,” commented Fraleigh. “ I look forward to working with the company’s employees to execute on growth opportunities we’ve identified and continue providing customers with excellent service, innovation and consistently high quality products.”
Only days later, on June 4, Tyson announced its agreement to acquire Tecumseh Poultry, one of the lead organic branded chicken producers in the U.S., and maker of the Smart Chicken brand.
“Consumers want choices. More and more consumers want options for fresh, organic food that fits their lifestyles,” said Eric Schwartz, chief marketing officer of Poultry for Tyson Foods. “The Smart Chicken brand is a leader in this key organic category, and the category’s growth makes this acquisition a strategic fit for Tyson Foods.”
This demand is reflected in the numbers. Sales of organic fresh chicken grew in volume by 8.8 percent between 2016 and 2017, or four times the rate of growth for conventional chicken, according to data from Nielsen’s Perishables.
Founded in 1998, Tecumseh produces air-chilled, fresh organic chicken as well as deli chicken products and chicken sausages through its facilities in Tecumseh and Waverly, Nebraska as well as its live operations.
“We’ve spent 18 years working to perfect our ability to produce the highest-quality, fresh chicken in the U.S. We’re very proud of that, and it’s not going to change,” said Kevin Siebert, president of Tecumseh. “Tyson Foods brings to the Smart Chicken brand and the rest of our product lines the resources to make us even stronger.”
This deal not only expands the Tyson name in the organic meat category, but follows only a week after Tyson announced it had agreed to acquire the poultry rendering and blending assets of American Proteins and AMPRO Products in a deal valued at $850 million, reflecting the potential for synergies between the two.
“Rendering plays a key role in growing our business and helping us deliver on our sustainability goals,” said Tom Hayes, president and CEO of Tyson Foods at the time. “Through this important business, no part of the animal goes to waste, and we can recycle valuable ingredients into feed for pets and aquaculture.”
All the Angles
Tyson Foods’ has read the writing on the consumer wall, and noted the growing upswing in popularity of protein, plant-based proteins, organic food choices, and sustainability, and has taken steps to advance its presence in all areas.
In October 2016, Tyson, which is the largest meat company in the U.S. by sales, became the first global meat company to invest in a meat alternative startup when it announced it had acquired a five percent stake in plant-based meat alternative producer Beyond Meat.
In December 2017, Tyson became a repeat investor, partaking in a $55 million Series F for the company along with venture capital firm Cleveland Avenue, which was founded by former McDonalds CEO Don Thompson.
“We’re enthusiastic about this investment,” said Monica McGurk, Tyson Foods’ executive vice president of Strategy and New Ventures & president of Foodservice at the time, adding, “which gives us exposure to a fast-growing segment of the protein market. It meets our desire to offer consumers choices and to consider how we can serve an ever-growing and diverse global population…”
Waste Not, Want Not
Sustainability has also been a key concern driving Tyson’s recent decisions and business direction.
“The world needs a more sustainable food system, and we believe it’s up to big companies like ours to set the pace with bold goals that help protect the planet while also enabling us to feed a growing world,” said Tyson CEO Tom Hayes.
Aligning with this mandate, the company also announced the launch of ¡YAPPAH! – a line of “protein crisps” made from upcycled chicken breast trimmings from Tyson’s own production, juice byproducts, and grain by-products sourced from Molson Coors – all ingredients that would otherwise have gone to waste.
¡Yappah! was born of the Tyon Innovation Lab – a project tasked with bringing consumer products to market in only six months.
“We could not have developed the Protein Crisps without the enthusiastic collaboration of partners like Molson Coors,” said Rizal Hamdallah, Head of Tyson Innovation Lab. “We will continue to seek out other great partners, large and small, who have resources and goals that complement our own.”
The ¡Yappah! brand name has also been launched as an umbrella under which future products will be launched that answer social and/or sustainability issues related to food.
“I was thrilled by the opportunity to source ‘forgotten’ ingredients and compose them into something more flavor nuanced and protein-filled than typical snack foods,” said Chef Kang Kuan, Executive Chef at Tyson Innovation Lab. “People might not realize that vegetable pulp left behind during juicing is arguably better and richer tasting than the juice itself, and spent grain is surprisingly delicious. So, we had these amazing flavors to work with. The result is a crispy snack that comes in four culinary-driven flavors that will appeal to all food lovers.”
-Lynda Kiernan