How Is Tyson Foods Positioning Itself through Innovation?



Tyson’s innovation initiative

Tyson Foods (TSN) is focusing on becoming a more value-added, protein-centric branded food company. It plans to leverage its portfolio of leading brands and scale to drive growth. It also expects to drive continued growth in protein through consumer behavior.

Tyson Foods is already progressing with growth in advantaged protein segments and shifting its mix to value-added segments. The company’s emerging brands such as NatureRaised Farms, Nudges, Van’s, Golden Island, and Hillshire Snacking are driving incremental sales in high-growth categories. The company is well positioned to lead growth and value creation over time.

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Core 9 plan

For the latter part of fiscal 2016, Tyson Foods hopes to save on raw materials, along with continued synergy realization. The plan is to use these savings in pricing for innovation and brand building. Tyson’s Core 9 product lines are the primary drivers of sales and profitability within its packaged retail offerings. These include brands such as Tyson, Hillshire Farm, Jimmy Dean, Ball Park, Wright, and Aidells.

In a presentation to investors in August, management mentioned that the IRI data revealed that the company’s efforts to drive volume momentum are having the expected effect. Core 9 volumes rose 2.2% for the 52-week period ending July 24, 2016. This came on the back of significant share gains aided mainly by Ball Park hot dogs, Hillshire Farms smoked sausage and lunch meat, Aidells super premium sausage, Wright Stack Pack Bacon, Jimmy Dean breakfast sausage, and sandwiches.

ETF exposure

Tyson Foods’ peers in the food industry include Pilgrim’s Pride (PPC), Hormel Foods (HRL), and Sanderson Farms (SAFM). They reported net profit margins of 7.5%, 9.3%, and 6.8% in their last respective quarters.

To gain exposure to these stocks, you can invest in the First Trust Consumer Staples AlphaDEX Fund (FXG). FXG invests 7% of its portfolio in Hormel Foods, Tyson Foods, and Pilgrim’s Pride. Sanderson Farms’ stock accounts for 1.3% of the AdvisorShares TrimTabs Float Shrink ETF (TTFS).

In the next part of this series, we’ll discuss Tyson Foods’ margins in the Chicken segment.


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