Oligopoly profile: Tyson Foods
The biggest merger ever in the ever-concentratiing meat packing business took place in 2001, with the acquisition by Tyson Foods of IBP Inc. Tyson was (and is) the world's largest producer of chicken meat. IBP (originally Iowa Beef Producers) had over the years become the #1 beef producer and #2 pork producer in the world. It's hard to imagine a definition of antitrust that would allow such a merger to take place, but the new company faced little opposition from the regulators.
While Tyson is a public company, 80% of the voting stock is held by one man, Don Tyson, the son of the founder. The company was started as an Arkansas poultry producer and shipper in 1947, and grew to be the #1 chicken processor by 1986. In 2003, the company took in over $23 billion.
Surpassing rivals like Cargill and Smithfield, Tyson is the dominant supplier of meat to US markets and food service and restaurants. Most conspicuously, Tyson supplies half of the Chicken McNuggets to McDonalds's. Already the leading exporter of US chicken meat to China, Russia, and Japan, it has a growing international presence.
Its growth is being fueled by that international expansion. In addition, like other meat processing companies, it is expanding its reach in the area of branded supermarket-ready products and, even more, in ready-to-eat foods. That adds on its continuing meat wholesale operations.
In 2002, the company's breakdown by product type was:
Beef 49%
Chicken 30%
Pork 10%
Prepared foods 11%
In the last two years, the company has amalgamated a variety of IBP brands into its own Tyson brands, which is now used for a wide range of chicken, pork, and beef products, include pre-cooked meals, broth, bacon, and deli meats.
According to a Business Week article ("Tyson: Is There Life Outside the Chicken Coop?", 3/10/2003), "the 'new' Tyson brand is the linchpin in the company's long march to move beyond low-margin commodity cuts. In chicken, Tyson has already proved that consumers will pay extra for breaded, marinated, or ready-to-microwave items that can be prepared in nothing flat. Such value-added products now account for about half of Tyson's $7 billion in yearly chicken sales and carry margins four or five times that of fresh meat. Tyson hopes to apply the same recipe to its beef and pork business."
As far as we can tell, the move has been a success, as the consumption of prepared food keeps expanding in the US. While other brands are still in the line (see table below), the Tyson brand keeps expanding throughout the retail product line.
Other interests include airline catering services, including supplying Mexican-style food products to restaurants in the US. The company also operates tanneries and tallow facilities. And, in keeping with other companies, it has protected itself by creating a certified organic chicken brand.
Tyson is deeply involved in animal husbandry as well. It managed the breeding and hatching of chicks through its Cobb-Vantress division, which it resells to its nearly 7,000 contracted chicken growers, so-called "Tyson family farms". It also sells feed to these contractors, who in turn sell back the grown chickens to the company. These contractors, though nominally independent, are in fact under the thumb of the company.
In the pork area, the companies owns and leases both sow farms (where piglets are bred) and finishing farms, where mature hogs are given their final fattening. The model for contracted pork growers is becoming similar to that of the chicken farmers. Cattle rancher, traditionally a little more independent group, fear being forced into the same dependent niche.
Other Tyson brands
| Category |
Brands |
| Ham, bacon |
Iowa Ham, Wilson, Wright |
| Beef meals |
Reuben |
| Pizza ingreduienst |
Bonici, Doskocil, Rosani, TNT Crust |
| Sauces, soups, stews |
Kettle Cooked Foods |
| Beef |
Jac Pac, Thomas E. Wilson |
| Mexican foods |
Mexican Original |
| Deli meats |
Continental Deli, ITC, Jordan's, Russer, Wright Brand |
| Chicken |
Lady Aster, Tastybird, Weaver |
| Organic chicken |
Nature's Farm |
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