Dive Brief:
- Smithfield Foods plans to build a new distribution center and expand its existing cold storage capabilities at its Tar Heel, North Carolina processing facility, according to a company press release. This $100 million investment will add roughly 250 new jobs.
- The cold storage expansion has commenced, and construction on the new distribution center will start later this month. Both projects are slated to be competed by fall 2018.
- "This expansion reflects the promising new era we're experiencing at Smithfield," Kenneth Sullivan, president and chief executive officer for Smithfield Foods, said in a release. "It supports our continued growth and helps us better serve our customers by providing additional capacity and optimizing our distribution footprint."
Dive Insight:
Smithfield Foods said the Tar Heel facility slated for expansion is already the largest pork processing plant in the world, employing close to 5,000 people. It's the latest facility expansion in the meat-processing sector in recent days. Last week, Tyson Foods announced it was investing $84 million to expand and upgrade its Union City, Tennessee poultry plant. This upgrade will double output capabilities at the facility, and add roughly 300 jobs.
For Smithfield, it's just the latest move to grow its U.S. operations. Earlier this month, Smithfield acquired Kansas City Sausage, a producer and processor of pre-rigor sausage. For the last 5 years, the two companies had a 50/50 joint venture. Larry Pope, Smithfield's former CEO, called it an ‘essential part of the company’s strategy to broaden product offerings and the company’s geographic footprint.”
In January this year, Smithfield purchased Clougherty Packing for $145 million. The acquisition includes Clougherty’s Farmer John and Saag’s pork-processing operations. It expanded Smithfield’s operations in Arizona, California and Wyoming. Smithfield’s stake as the world’s largest pork supplier clearly isn’t slowing down its appetite for growth.
Consumers are increasingly looking to eat a simpler diet, which includes lighter sources of animal protein. This allows pork to compete alongside chicken and fish as a healthy option at dinnertime. Pork consumption also appears to be on the rise. The U.S. Department of Agriculture reported record volumes for pork for the fourth quarter of fiscal 2016. In addition, the USDA predicted pork processors would produce 3% more than the same time last year. Smithfield’s latest expansion seems ideal to grow with these estimates and better position the company for future consumer demand for its products.