Just Food

Daily Newsletter

18 August 2023

Daily Newsletter

Tyson Foods ‘exploring sale of China poultry business’

Only last week, the US meat giant announced four domestic chicken plant closures.

Tyson Foods is reportedly planning to sell its China poultry business and is said to have approached potential buyers.

According to unnamed sources cited by Reuters, the US-headquartered meat giant has hired investment bank Goldman Sachs to advise on a potential sale and has sent preliminary information to potential buyers, including private-equity firms.

Two of the news agency’s sources, who declined to be identified, said the disposal plans were at an early stage. One of the three sources suggested Tyson Foods’ China poultry business generated annual sales of about $1.1bn.

The world’s second-largest meat processor after Brazil’s JBS, did not quantify sales in China in its 2022 annual report. Just Food has approached Arkansas-based Tyson Foods for comment on the China poultry sale speculation. Reuters said the publicly-listed business declined to comment.

Last week, the Jimmy Dean and Hillshire Farm brand owner revealed it planned to close four domestic poultry plants as third-quarter revenue and profits dropped, adding to the financial strains of the previous two quarters.

CEO Donnie King said on a follow-up call with analysts last week that the business is “continuing to evaluate everything as we automate and modernise” assets, when asked on the potential of further plant closures. “We’ll continue to look,” he said.

Tyson Foods entered China in 2001 and has its headquarters in Shanghai. In June, the company announced the “commencement ceremony” for its so-called Nantong Smart Factory based in the city of the same name in Jiangsu province.

A statement said the facility “integrates feed processing, poultry breeding, slaughtering, processing and sales”, and would serve the retail and foodservice channels in China with chilled and frozen chicken products.

The “Tyson Nantong Smart Factory is the third in operation after Tyson Rizhao Smart Factory and Tyson Xiaogan Smart Factory”, according to the statement, which added Tyson Foods has “three R&D centers, four large industrial chain base layouts, and dozens of breeding farms in China”.

In Tyson Foods’ 2022 financial year, group sales of beef, chicken and pork rose 13% to $53.2bn. Chicken increased 23.3% to $16.9bn, with volumes up 0.7%.

However, in the most recent third-quarter reporting period, chicken sales dropped 4.5% to $4.2bn. Year-to-date sales were $12.9bn, up 4.9%.

Brazil’s JBS also this week reported falling sales in its second-quarter results, with the bottom line turning to a net loss.

The dairy and soy food sector will see rising demand for lactose-/gluten-free products

GlobalData estimates that the global dairy & soy food sector will grow at a CAGR of 17% during 2022–27. The healthy eating trend has encouraged consumers to seek alternatives to traditional dairy products. Plant-based dairy alternatives are often perceived as healthier due to their lower saturated fat content. Moreover, increasing awareness about food allergies and intolerances, coupled with consumers’ interest in alternative diets, will drive manufacturers to launch lactose- and gluten-free products. Consumers in high-income countries are increasingly seeking products made from grass-fed and free-range livestock.