The Supply Side: Tyson Foods seeks snacking growth with new products

Tyson Foods controls a large portion of U.S. dinner plates and a sizable share in lunch boxes and breakfast with its chicken, beef, pork, deli meats, refrigerated and frozen Jimmy Dean and Hillshire products. The company processes one in every five pounds of chicken, beef and pork in the U.S.

But the company is not content with the status quo. Megan Huddleston, senior vice president of innovation at Tyson Foods, said the meat giant continues to innovate and grow share in the snack category. She said consumer behaviors continue to shift, and after a year at home, many families are more mobile in 2021 as they return to school and the workplace.

The recent launch of Hillshire Farm Snacked!, a youth snacking product of meat, cheese and a treat, is a kid-focused version of the Hillshire Snacking product launched a few years ago. Snacked! is a refrigerated product for families on the go, Huddleston said in an interview with the Northwest Arkansas Business Journal.

While the Snacked! product puts Tyson Foods in the new category of youth snacks, the company already has succeeded in the adult snacking category.

“Over the years, Tyson Foods has continued to invest in its protein snacking products,” said Mike Fanelli, marketing director for Hillshire Snacking. “From namesake brands like Tyson, Jimmy Dean and Hillshire Snacking, which features the No. 1 selling adult combo item in the category since 2018 and has seen 20% growth year-over-year.”

He said the company does not yet have data for the kids snacking category, but it expects to see similar results as Tyson has seen in other segments.

Huddleston said consumers are snacking more than ever, and they are also reaching for protein snacks at a record rate. Marketing research firm IRI recently reported that consumers have been snacking more since around 2018. The average consumer snacks 2.7 times per day, with 30% snacking five or more times per day. Snacking has become a lifestyle, according to Sally Lions Wyatt, an insights analyst at IRI.

Wyatt also said more than half of consumers want snacks they can eat on the go. She said the trend is expected to continue through 2022 and beyond. IRI found that 66% of consumers said they snack for enjoyment, 49% do so to satisfy hunger, and 21% said they snack to refuel.

Huddleston said Tyson Foods continues to leverage research and processing capacity to fill areas in the market where consumers need or want products. She said the Snacked! products are just that, an answer to what consumers say they want. She said three square meals a day is no longer the norm, and snacking represents about half of all eating occasions. She added that Tyson Foods launched the new products under its Hillshire brand, which already has proven itself with the adult snacking companion.

“Tyson benefits from having many large brands in the portfolio. Hillshire Farms garners high trust from consumers along with high-quality marks. Snacked! is an extension of the success Hillshire has shown in the adult snacking category,” she said.

There is also an online push as e-commerce growth continues to explode, a behavior widely adopted during the pandemic. Huddleston said 22% of U.S. consumers bought a Tyson Foods product online in the company’s second quarter, 6.5 million more households than the first quarter of 2021. She said the launch was at retail across multiple grocery chains.

Snacked! is a protein pack that contains three bite-sized components that pair with the flavors of Hillshire Farm meats and cheeses with a sweet treat. Tyson Foods said the company’s research formulated the protein snacks for kids. The launch has four different flavor choices, two of them pair pepperoni and cheese with either cake bites or brownie bites. There is also a salami and pretzel rod paired with Monterey Jack cheese. The other option is turkey and cheddar cheese paired with chocolate chip cookies.

Fanelli said that while Tyson Foods and Hillshire provide the meat for the snack product, the non-meat items are sourced from suppliers. The Snacked! products are manufactured in the company’s Cassville, Ill., plant.

Fanelli stopped short of saying what other snack products could be in development. Still, he said the company constantly transforms and listens to consumers on what they expect from food companies.

“We are using our size, scale and agility to quickly deliver new products that address consumer needs and challenge the industry status quo,” he said.

With commodity, transportation, and packaging costs rising sharply in the past several months, Fanelli said Tyson Foods has increased prices to help offset significant raw material and supply chain cost inflation. The price at retail is $2.69 for a two-pack.

John Nudi, group president of North America for General Mills, said the company saw an uptick in snack demand this year, from cereals to refrigerated doughs for cookies and baked goods. General Mills reported a 5% gain in retail sales early this year with 4.6% gains in the recent quarter.

Nudi said General Mills took price increases in August of 5.9% to offset higher costs. That compared to 3.9% and 4.2% gains in the two respective earlier quarters. Nudi also said inflationary pressure was a challenge along with a sluggish supply chain.

IRI also predicts more pricing power for snack makers through mid-2022. Wyatt said core snack sales are also projected to grow between 3% and 4% through 2022. She said product makers would have to raise prices again to outpace inflation.

While online sales of snacks are growing fast since the pandemic, IRI also said brick-and-click retailers would continue to play a critical role. According to IRI, the online share of snack sales is about 12% but is projected to be 20% in two years.

IRI also found that 60% of the snacking sales growth over the past year has been online. Tyson Foods and General Mills execs said they are investing more in growing online businesses through trusted retail partners, third parties and direct-to-consumer.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.