Tyson Foods CEO hasn't ruled out acquiring Beyond Meat, other venture investments
During the CAGNY conference in Florida, Food Dive talked to top food executives to gain insight into how CPG companies are positioning their businesses to tap into growth areas amid rapid changes in consumer tastes. This is the first in a five-part series. To read the second story on Campbell Soup, please click here.
Tyson Foods hasn't ruled out an acquisition of plant-based food company Beyond Meat or one of the other businesses that its venture capital arm has recently invested in, the company's CEO told Food Dive.
Tyson Foods initially took a 5% stake in Beyond Meat a year-and-a-half ago, the first time a major meat producer invested in a plant protein-based company. It increased its holdings after participating in another capital financing round late last year. Tyson Ventures, launched in December 2016, recently took a minority position in Memphis Meats, a cell-cultured meat startup in San Francisco and earlier this month announced it would put funds into Tovala, a manufacturer of steam ovens and ready-to-cook foods.
"Any investment that we're making through the Tyson Ventures we leave that as an option, an outright acquisition is something we could pursue," Hayes said on the sidelines of the annual Consumer Analyst Group of New York conference in Florida. "It's not something that is off the table, but I would say that's our lead in, our lead in is to invest, a great investment and stay close to it. If it does become something that we feel is best for our shareholders then we can pull the trigger on it."
Officials at Tyson Foods, better know for its chicken, pork and beef products, have said investing in lab-grown or plant-based meat doesn't meaningfully compete with the company's core businesses, and taking stakes in these fledgling startups extends the reach into feeding a diverse range of consumers.
While an outright purchase could eventually take place, for now Hayes said Tyson Foods is most interested in helping young companies grow while enabling his firm to glean insight into new and emerging opportunities outside of its core business.
"No company in the world is better positioned to take clean meat global than Tyson," Alison Rabschnuk, director of corporate engagement with the Good Food Institute, said following the Memphis Meat investment. "With the backing of Tyson, clean meat will be able to come to market more quickly and at closer price parity with conventional meat. We applaud Tyson for being one of the first-movers in this space and expect more companies to get involved as they begin to understand it's not a question of 'if' but 'when.' "
Tyson Foods has seen demand soar as consumers look for more protein, enabling it to avoid the growth problems plaguing other companies in the CPG space. But it also has aggressively responded to changing food consumption habits. In the case of plant-based foods, the industry is projected to hit $5.2 billion by 2020, likely putting Tyson Foods' financial involvement in a much clearer and more profitable perspective.
According to HealthFocus data, 17% of U.S. consumers aged 15 to 70 currently claim to eat a predominately plant-based diet, while 60% report to be cutting back on meat-based products. Of those who are reducing their intake of animal-based proteins, 55% say the change is permanent, and 22% hope that it is.
Hayes, who has been at the helm of Tyson for a little more than a year, has made a commitment to long-term growth and transforming the business into a total food company — "doubling down" its presence in protein. Global demand is surging and the meat giant wants to fortify its position to capitalize on this trend and grow along with it.
The 87-year old company was rumored to be interested in Pinnacle Foods, the owner of Bird's Eye, Duncan Hines and Aunt Jemima brands, but Goldman Sachs reported this week that Hayes told analysts at CAGNY it doesn't have the high protein profile the company is targeting.
The focus is on reducing its debt following the $4.2 billion AdvancePierre purchase last year, but if a great deal arises, the company wouldn't hesitate, Hayes told Food Dive. "If we can see excellent synergies come out of it, whether it's revenue synergies or cost synergies, we'll certainly do it," he said.
Global protein consumption is rising about 3% annually, but could increase as lifestyles and economies around the world improve. "The first thing people want to do is eat more protein, before they buy new clothes or anything," Hayes said. "Overall, I think protein has a huge tailwind. It's not going to stop."
Tyson also has worked aggressively to expand its roster of well-known brands, including Jimmy Dean and Hillshire Farms, by introducing new products, many of which address the public's demand for clean labels or increasing on-the-go consumption habits. The AdvancePierre acquisition added ready-to-eat hamburgers, stuffed chicken breasts, cheesesteaks and other sandwiches to its lineup.
During the interview, Hayes said the company is working to get products to market faster, and then quickly fixing any problems that may arise. "We are constantly doing as much as we can to not only drive the product to the marketplace quickly but then garner those insights from where they did fail and where they are successful so we can learn on the fly," he said.
The Arkansas company has benefited, for example, from its Tyson Tastemakers meal kits that have allowed it to design new products for frozen and refrigerated case, he said. One recent failure came when it introduced Ballpark brand jerky products. The item failed to catch on in part because it was made for the center of the store, which is outside of Tyson's expertise, Hayes said. The company has had better luck with premium jerky products, like its Golden Island brand, which it inherited as part of its $7.7 billion purchase of Hillshire Brands in 2014.
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