Tyson Foods CEO Noel White grew up in the heartland, but he knew as a teenager what his meal ticket for success would be.
“I knew I wanted to be in business from the time that I entered college in some form. I didn’t know exactly what,” said White, a Des Moines, Iowa native and a graduate of Bemidji State University in Minnesota.
The son of a homemaker and a small businessman – his father owned a monument company – White graduated college with a business degree and landed his first job in sales for food giant Hormel Foods. His first stop was Montgomery, Alabama before he was transferred to Oklahoma City, where he met his wife.
A growing midwestern beef company called IBP was entering the pork business in the late 1980’s and White had a chance to leave Hormel to help with the new division at the rival company. He made the leap. Fast forward more than a decade later and IBP was brought into the Tyson Foods family by a 2001 $3.2 billion acquisition that was one of the biggest in the history of the Springdale-based food company.
White, 60, credits his well-roundedness and preparation to lead Tyson Foods with his many different positions over the years.
“I think it’s probably the cumulative effect of the different positions that I have been in,” he said. “I’ve spent a fair amount of time in our pork business. I spent a number of years in our beef business. I managed our poultry business for a little over three years, managed our international business for a year. So there’s various aspects of the business that I’ve been involved in that have given me a very broad exposure to all the different types of businesses that we operate in.”
TRANSFORMATION, GROWTH AHEAD
The 2014 $7.7 billion acquisition of Hillshire Brands ushered in a new era for Tyson Foods. The company’s core business of beef, pork and poultry was boosted by Hillshire’s diversification into the prepared foods market. Tyson had some standing in that division, but the Hillshire move brought in a substantial growth in market share and brand awareness through products like Jimmy Dean and Ball Park.
Tyson executives and analysts have noted that the profit margins on prepared foods – and the growing consumer demand – make this segment a high priority for the company. White said in baseball terms, the “game” of transformation has just begun.
“I think we’re probably in the early innings of the transformation,” he said. “We’ve gone from a business that represented a fairly small portion of our total sales to a fairly significant portion. Today, our prepared foods sales are between $9-$10 billion, and we’ve gone from a relatively small earnings base of 1% or 2% to the 11-12% range which represents about a billion dollars in earnings. It’s someplace just short of a third of what our total earnings have been.”
White echoes what Tyson Foods chairman and grandson of the founder John Tyson says about the importance of prepared foods to the company’s future. They contend that Tyson Foods can become the “Procter & Gamble” of prepared foods, carrying a large portfolio of name brands that consumers want.
“That would be the plan. That is the intent, to continue to grow our branded value added business, that the earnings stream in those type of businesses are much more stable than other parts of our business. The margin structures tend to be higher than what other parts of our business are. So that is where the growth would be,” White said.
That’s not to say there will be less emphasis on Tyson’s legacy business in the traditional commodities arena. White says he’s looking for growth opportunities to stabilize the often-volatile beef, pork and poultry sectors.
“We will continue to invest in our primary protein companies today that are more commodity-oriented in areas that it can provide more stability to our earnings stream. So there are businesses within our business that are high margin, consistent in earnings. We’ll also invest in those segments as well,” he said.
International growth is another top task for White. Noting that about 90% of global protein consumption growth will occur outside of the U.S. in the coming years with about 60% of that centered in Asia, White has said previously that acquisitions, exporting more products, and developing new products and facilities outside of the U.S. will factor into setting the stage to meet this rising demand. The company’s recent acquisitions of Keystone Foods’ U.S. and Asian operations and Brazil Foods’ Thai and European assets underscore this strategy.
White said developing alternative proteins – either plant-based proteins or cell-based proteins that are laboratory-grown – will become a bigger emphasis to meet international challenges.
“In fact, alternative proteins are growing at a faster rate in other parts of the world than what it is here in the United States,” White said.
Tyson Foods revenue topped $40 billion in 2018 and White sees significant revenue growth on the horizon. Five years ago, revenue exceeded $34.3 billion and ten years ago, Tyson Foods was a $26.7 billion company. When asked where the company will be five years from now, White offers a two-word description: much larger.
“Much larger than what it is today. More profitable and more stability in our earnings stream,” he said. “Growth is a primary focus in the areas that provide stability with a higher earnings stream.”
You can watch Tyson Foods CEO Noel White’s full interview in the video below.