Sanderson Farms has steadily scratched its way up the poultry
processors' pecking order. The fourth largest in the US,
it produces, 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
800-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
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 89%
of its gross sales in the US with the remaining 11% coming from
The company, founded in 1947, 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 Carolina, which combined process more than 9.37
million chickens per week.
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.
Altogether, during fiscal 2013 Sanderson Farms processed 452
million chickens to produce 3 billion dressed pounds. Its prepared
chicken product line consists of about 95 institutional and
consumer packaged partially cooked or marinated chicken items that
are sold nationally and regionally primarily to distributors and
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
$3.34 million, $1.27 million, and $875,000 on advertising in fiscal
2013, 2012, and 2011.
Sanderson Farms has been pumping out poultry products, logging
net sales increases year-over-year during the past five years and
in 2013 posting its highest sales.
Net sales for Sanderson Farms rose 12% in fiscal 2013 as
compared to 2012. The company attributes the increase to rising net
sales of poultry products, thanks to a 10% increase in the average
sales price of poultry products sold and a 3% increase in the
pounds of poultry products sold from higher bird weights. The new
Kinston complex, which reached full capacity in 2012, aided in this
effort, as the company returned to full production at all
facilities during fiscal 2013.
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 rise in both the pounds of
poultry sold and the feed in broilers processed.
Operating cash flow mirrored the net income trend, increasing in
fiscal 2013 by $47 million vs. 2012 due to improved market prices
for poultry products during the reporting period and a $27.2
million drop in live chicken, feed, and egg inventories.
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 2013 marked a new high, increasing some
12% 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).
To keep up with demand, Sanderson Farms in 2013 began building a
new feed mill, hatchery, poultry processing plant, and waste water
facility on separate sites across three Texas counties.