No matter how you slice it, steak is the main attraction at Tyson Fresh Meats. A processor of beef and pork, Tyson slaughters and sells fresh beef and pork and case-ready ground beef and pork products. Its offerings are sold under brand names, including Chairman's Reserve Beef and Supreme Tender Pork, to mostly US food retailers, foodservice operators, and meat processors. Tyson does not raise cattle, but has buyers who purchase livestock on the open market. It has swine buyers, as well; however, it does raise some pigs. Non-edible animal remains are processed and sold to manufacturers of animal feed, leather, and pharmaceuticals. Tyson Fresh Meats is a subsidiary of chicken and meat producer Tyson Foods.
Tyson Fresh Meats' operations consist of 17 production sites located in North America. More than half of the production facilities are used in processing cattle, with remaining sites used to process hogs. By business segment, in fiscal 2011 (ends September) beef accounted for more than 40% of the parent company's sales and pork 14%. Both segments rely heavily on demand from food retailers, which generate roughly 40% of all sales.
Geographically, most sales are made in the US, with some 15% to 20% of beef and pork segment sales coming from overseas. Countries with the largest appetite for beef include Mexico, China, South Korea, and Vietnam. Japan and Mexico account for more than half of the pork segment's exports.
In fiscal 2011 (ends September) Tyson Fresh Meats contributed 89% to Tyson's operating income. Consolidated beef and pork segments reported more than a 10% rise in operating income atop a 17% jump in sales over the prior year. Separately, year-over-year sales in the beef and pork segments increased by 16% and 20%, driven by higher sales prices aimed to counter increased livestock costs. The improvement in income, however, was buoyed by pork, which offset more than a 10% slump in beef business attributable to employee related and other operating costs. In the past, instances of bovine spongiform encephalopathy (BSE, or "mad cow" disease) have forced costly reductions (and subsequently ramp ups) to production.
Tyson Fresh Meats' strategy for gaining the top shelf for its products focuses on differentiating itself from major competitors, such as JBS Swift (part of JBS USA) and Smithfield, as it gooses demand from markets for value-add, higher profit products. To that end, Tyson Fresh Meats promotes a branded program that moves beyond selling beef and pork "in a box" to building consumer loyalty to the Tyson label. In addition to raising brand awareness and trust in its product safety and quality, the company competes on price, as well as breadth and availability of offerings, and customer service.
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