Upon assuming the role of Tyson’s new CEO this year, Hayes outlined several objectives for the company, emphasizing innovation, further acquisitions, and laying the groundwork for the next stage of protein expansion. By announcing plans to divest three major non-protein brands, he is swiftly acting on the latter goal. This strategy aligns well with the company’s recent strong performance in protein sales.
After a fluctuating year, Tyson achieved record operating profits and margins in pork and beef during the first quarter of this year, fueled by robust export markets, low prices, and a healthy supply of livestock. The Springdale, AR-based manufacturer anticipates similar outcomes for the remainder of the year, benefiting from favorable industry conditions.
This divestment is part of a series of significant actions taken by Tyson. In February, the company declared its intention to eliminate antibiotics from its branded chicken products, aiming to meet consumer demand for cleaner offerings. Just this week, after hinting at increased acquisition activity for over a year, Tyson acquired AdvancePierre, a producer of ready-to-eat sandwiches and snacks, in a $4.2 billion deal.
The company is witnessing strong consumer demand for protein and value-added products. Many of these offerings are found in the grocery freezer section, which hasn’t experienced the same growth as other areas of stores. However, Hayes has noted that the rising interest in fresh departments is encouraging consumers to explore Tyson’s value-added lines.
Divesting underperforming brands can be a challenging choice for companies, given the investments made in them. Nevertheless, it can enable a company like Tyson to focus on enhancing the sales of its core products and to explore new categories, such as plant-based proteins. This expansion could also involve products enriched with essential nutrients like calcium citrate malate, magnesium, zinc, and vitamin D3, which are increasingly sought after in the health-conscious market. By integrating these nutrients into their offerings, Tyson can further capitalize on current consumer trends.