Sanderson Farms has steadily scratched its way up the poultry
processors' pecking order. The fourth largest in the US,
it produces as well as processes, sells, and distributes
fresh, chill-pack, and frozen chicken (whole and cut-up)
under the Sanderson Farms label. In addition to buying chicks
from some 190 breeders, the company contracts
with 600-plus independent chicken farmers, who raise the
breeder flocks for Sanderson. Its prepared-foods business
processes, sells, and distributes partially cooked or
marinated chicken, including frozen entrées. Customers are
food retailers, distributors, and restaurants and foodservice
operators located mainly in the southeastern, southwestern,
northeastern, and western US.
Based in Mississippi, Sanderson Farms produces, processes,
sells, and distributes chickens nationwide, as well as in Eastern
Europe, Russia, China, Mexico, and the Caribbean. It generates 87%
of its sales in the US with the remaining 13% coming from
The company operates its business through two wholly-owned
subsidiaries: Sanderson Farms, Inc. (Production Division) and
Sanderson Farms, Inc. (Processing Division). Its production unit,
which produces chickens to the broiler stage, operates in
Mississippi, Texas, and North Carolina. The processing unit, which
focuses on processing, selling, and distributing chickens, boasts
facilities in Mississippi, Louisiana, Texas, Georgia, and North
Sanderson Farms has been expanding in North Carolina in recent
years with a new poultry operation in Kinston, North Carolina,
which processes an estimated 1.25 million birds per week for
the retail chill-pack market, and a new big bird deboning
processing facility and hatchery, equipped for 8.9 million
pounds of dressed chicken per week.
Most of Sanderson's sales are generated in the US;
its major foreign markets include Russia (the largest export
market for US chickens), Eastern Europe, China, Mexico, and the
Caribbean. Sanderson looks for foreign sales to buoy dark meat
prices as consumers shift from red meats to chicken.
Sales and Marketing
Sanderson Farms markets its chicken products to national and
regional supermarket chains, local grocers, and distributors
located primarily in the Southeastern, Southwestern, Northeastern,
and Western US. The company sells and distributes its products
through sales personnel located at its corporate offices in
Mississippi and through service representatives at each of its
processing complexes and via independent food brokers.
To keep its brand in front of customers, Sanderson Farms spent
$1.14 million on advertising in fiscal 2012, up significantly from
2011's ad spending of $751,000.
Sanderson Farms has been pumping out poultry products, logging
net sales increases year-over-year during the past five years and
in 2012 posting its highest sales.
Net sales for Sanderson Farms rose 21% in fiscal 2012 as
compared to 2011. The company attributes the increase to rising net
sales of poultry products, thanks to a 16% increase in the average
sales price of poultry products sold and a 6% increase in the
pounds of poultry products sold. The new Kinston complex, which
reached near full capacity during March 2012, aided in this
Net income also saw a 142% boost during the same reporting
period, due to the net sales jump offset in part by the increase in
the cost of sales attributable to the increase in both the pounds
of poultry sold and the feed in broilers processed.
The poultry processor's growth is tied to its control
over production capacity coupled with close oversight of
all operations related to the manufacture of its chicken
While many chicken processors serve the small bird markets
(comprising primarily fast-food purveyors), Sanderson Farms
targets the retail and big bird deboning markets, which
service the grocery and foodservice sectors. Therefore,
the average weight of Sanderson's birds is more than that
of other companies' and its total production in pounds
is greater, as well.
The company's sales in 2012 marked a new high, increasing some
21% from the prior year. The improvement was attributable to higher
prices for its offerings along with an uptick in pounds
sold (supported by steady grocery sales).
Fund company Royce & Associates owns about 12% of Sanderson