Food Company of the Year: Sanderson Farms
Joe F. Sanderson
Best known for:
- Commitment to antibiotic use in poultry production
- Its "truth-telling" television and radio ad campaign
As consumers have become more interested in what goes on behind the scenes in animal agriculture, poultry producers have raced to phase antibiotics — which many say are responsible for production of antibiotic-resistant bacteria — out of their birds.
Sanderson Farms, however, has stood its ground.
Mike Cockrell, chief financial officer of the protein company, told Food Dive that Sanderson Farms has raised its broiler chickens with antibiotics for 70 years, and has no plans to change.
Cockrell explained that the company believes antibiotic use — when medically necessary — can improve animal welfare and environmental sustainability, two major concerns for today’s consumer. Sick, underperforming chickens require more feed, water and labor on the ground, as well as replacements when they die off. He said this significantly expands a company's carbon footprint. But the main reason the company remains committed to antibiotics is because of food safety concerns.
“If we can use USDA and FDA approved antibiotics and approved methods and … know that those antibiotics are not in the meat when the meat goes to market, we feel an obligation to do that,” Cockrell said. “If a sick chicken comes to the plant and it hasn’t been treated with antibiotics, it brings with it more salmonella, more E. coli … and it makes it more difficult to produce a product at the end of the day that has less of those bacteria.”
In 2016, Sanderson launched a “truth-telling” advertising campaign that picks apart the antibiotic-free label claims of its competitors, chalking them up to “marketing gimmicks designed to mislead consumers and sell products at a higher price.” The company doubled down on this message in August with a series of television and radio spots called “Old MacGimmick,” which were created to further educate shoppers about what the company considers “prevalent falsehoods and half-truths within poultry marketing.”
This was a gutsy move for the third-largest U.S. poultry producer, especially since heavy-hitting competitors like Tyson, Perdue and Pilgrim’s Pride could potentially poach consumers seeking antibiotic-free meat.
Sanderson Farms' 2016 vs 2017 SalesData from Sanderson Farms
“Products with elements of transparency are increasingly gaining popularity, and it’s reflected in the 9% sales growth year-over-year,” Matt Lally, manager of Fresh Growth & Strategy at Nielsen told Food Dive via email. “Sales of fresh chicken touting livestock claims such as 'antibiotic-free' or 'vegetarian-fed' represent 14% of all fresh chicken dollars.”
But despite a flood of antibiotic-free poultry product launches and perceived consumer concern, Lally said that 56% of consumers don’t know what these claims mean — which could be one reason for Sanderson’s continued sales growth.
Roughly 20% of the population could care less about antibiotics. All [consumers] are interested in is quality and value, and they are going to look at the grocery store meat case and find the least expensive protein source for supper.—Mike Cockrell, CFO of Sanderson Farms
In its most recent earnings report, Sanderson posted net sales of $931.9 million compared to $729 million in the year-ago period, continuing the year’s robust growth. Cockrell said that while larger competitors are phasing out antibiotics as a point of differentiation, antibiotics help Sanderson keep bird deaths — and by extension, prices — low, helping it stand out on the shelf.
“Roughly 20% of the population could care less about antibiotics,” he said. “All [consumers] are interested in is quality and value, and they are going to look at the grocery store meat case and find the least expensive protein source for supper.”
Cockrell said it’s impossible to quantify how much of an impact the company’s recent advertising campaigns have had on its financial results, but said that Sanderson has received an impressive amount of positive social media engagement.
Sanderson Farms' Stock Prices in 2017Data from Marketwatch
This could help the company clear the air about its practices after a federal lawsuit in June claimed its poultry contained residues of chemicals and synthetic drugs that are prohibited for use in food animals, including ketamine, a drug with hallucinogenic effects. Sanderson disputed the claim, stating that aside from Food and Drug Administration-approved doses of penicillin, it did not administer any of the drugs described in the suit.
As it heads into the new year, Sanderson is preparing to expand its pro-antibiotic campaign to give consumers a more nuanced explanation of antibiotic use in the poultry industry, of which Cockrell said it’s “just scratched the surface.”
Cockrell believes that the continuation of this campaign and increased production at a processing plant in St. Paul, Minnesota — which will reach full operating capacity in January — will bring the protein producer continued financial growth. The company expects to produce roughly 6% more pounds of chicken in the new year.
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