Dive Brief:
- Tyson Foods debuted a line of 60-plus forms of Tyson Red Label Chicken with No Antibiotics Ever, along with grab-and-go, heat-and-eat and made-to-order food items at the National Association of Convenience Stores Show in Chicago, according to Food Business News.
- The products include items that can be sold from a freezer or refrigerated case, or heated and held in warmers. Offerings include Hillshire Farm Sausage Rolls, Hillshire Snacking Small Plates, Tyson Single-Serve Chicken Nuggets, and Fresh-Cut Sandwiches and Hot N’ Ready breakfast sandwiches, both from Tyson's newly acquired AdvancePierre Foods subsidiary.
- "Convenience stores are becoming food destinations. Operators are stepping up with better offerings," Nancy Todys, vice-president of marketing for Tyson Convenience, told the publication.
Dive Insight:
Tyson's expansion into convenience stores with higher-end food offerings signals confidence in that retail space and in ongoing evolution. Following the company's $4.2 billion purchase of AdvancePierre Foods earlier this year — with its ready-to-eat hamburgers, stuffed chicken breasts, cheesesteaks and other sandwiches supplied to restaurants, hospitals, schools, convenience stores and vending machines — such a move was more likely.
AdvancePierre had been performing well, with net sales reaching nearly $1.6 billion in fiscal year 2016, including 2.5% organic core volume growth. The purchase advanced Tyson’s goal of expanding into branded and prepared foods that generate larger and more predictable profits than its often volatile meatpacking operations.
Other big-name companies are showing increasing interest in entering the food service channel. Hormel Foods acquired Chicago-based Fontanini Italian Meats and Sausages this summer for $425 million. The family-owned firm has made a name for itself with authentic Italian meats and sausages and other premium meat products, including pizza toppings and meatballs, for the food service sector.
The Fontanini purchase was seen as a nice addition to Hormel's food service lineup, which already includes brands such as Hormel Fire Braised meats, Old Smokehouse pecanwood smoked bacon and a variety of Jennie-O Turkey products.
Plant-based protein offerings also are showing up in the food service channel, with Impossible Foods' recent announcement that its Impossible Burger will be offered in university and company cafeterias, as well as cultural venues such as museums, performing arts centers, aquariums, corporate dining and educational facilities.
Consumers are increasingly turning to convenience stores for items that they previously might have gone to a retail grocery store to buy. Between 1988 and 2016, convenience stores’ share of grocery sales doubled from 8% to 16%, according to The Food Institute. Meanwhile, traditional grocery stores’ market share has steadily eroded, dropping from 49% in 2011 to 44% in 2016.
The days when convenience stores’ only food options were bags of chips and hot dogs lazily spinning beneath heat lamps are a thing of the past. Now it’s common to find a fresh produce section, grab-and-go sandwiches and even a made-to-order food station inside your local convenience store. Tyson Foods was cognizant of this shift when it acquired AdvancePierre and announced its recent line of new c-store offerings.
The key word here is convenience. Some people like being able to purchase gas, buy a quality snack and maybe some fresh produce to go, and be in and out and on their way in less time than it takes to park, shop and checkout at a traditional grocery store.
Tyson's latest earnings report in early August showed that its prepared foods strategy was bearing fruit. Sales in that category were up 2.4%, which surpassed those in beef, pork or chicken, with the AdvancePierre acquisition credited for driving growth in the segment. Tyson is expected to shed more light on how the AdvancePierre integration and its dive into the prepared foods category is going when it reports earnings in November.