Process and Operations

Tyson Foods Not Just a Chicken Company Anymore

Tyson Foods, no longer just a chicken company, is now the largest food processor in North America.

By Dave Fusaro, Editor in Chief

Kraft probably hasn't always been North America's largest food company. But you can't prove it by us. When we created our first Top 100© Food Companies report in 1975, Kraftco was at the top of that list. (In an interesting historical note, Greyhound Corp. was No. 7 by virtue of its ownership of Armour & Co. — remember that?)

Over the next 29 years, some predecessor, future sibling or parent of the current Kraft Foods Inc. was perennially at the top of that list, whether the name was Dart & Kraft, General Foods or Philip Morris. Thirty years is quite a run. But the run is over.

I don't like to make too much of a horse race out of lists because I don't think any company sets a corporate strategy to make a list. Lists usually are subjective. Despite all our efforts at fairness and objectivity, even ours is. Just as my predecessors didn't use Greyhound's bus ticket sales to put it on the 1975 list, we don't include Anheuser-Busch's amusement park revenues or Cargill's ocean freight and logistics business or Dairy Farmers of America's transportation (and temporary ownership of) raw milk. We also don't count Kraft's considerable ($10 billion) European-based revenue. Nor Tyson Foods Inc.'s relatively puny 6 percent of sales that are sourced outside of North America.

So it is on that basis that Tyson ascends to the No. 1 position as the largest food processor in the U.S. and Canada in this, our 31st annual list.

What does it mean? For Kraft, this is a time of focus and retrenchment, and there's nothing wrong with that. When you're the biggest – and arguably the best – for so long, the only step is down. For Tyson, which not long ago was just a chicken company, this is another peak in a transformation that started in 1977 with the purchase of some hog production facilities and reached a fever pitch with its audacious purchase of IBP in 2001.

It's not all roses, however. Look at profits: Tyson posted net income of $925 million for its fiscal 2004. Kraft, despite all the criticism it takes, made $4.6 billion. Just as we went to press, Tyson posted mixed results for its third quarter and predicted a "challenging" fourth quarter. But Chairman John Tyson also noted steady growth in his company's "value-added product mix" and predicted it would reach 40 percent of sales by the end of the fiscal year.

Tyson is still on the upswing, not even having scratched the surface of what it can do with precooked, preportioned and otherwise more convenient cuts of animal protein in all three major segments: chicken, beef and pork. With the opening of its Discovery Center research and development facility in hometown Springdale, Ark., expected early next year, who knows what will come down the pike next.



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