Deli Delectables Debut For Tyson Shareholders

At its Feb. 7 shareholders meeting in Fayetteville, Tyson Foods Inc. fed the crowd some real “baloney.” Actually, it was beef balogna.

In addition to approving a new, albeit smaller board of directors and authorizing the repurchase of $25 million worth of its own stock, the Springdale company announced this month’s national debut of a new line of deli products.

The food includes at least 33 new items in three categories — boxed lunch meats, re-sealable bag lunch meats and self-serve deli meats. Company Chairman and CEO John Tyson said the deli products are being well received.

“It’s our first line of deli products and it has all four proteins in it — sliced beef, pork, chicken and turkey meats,” Tyson said. “We will start to see some of those activities matched up with our $100 million advertising campaign. You will see the products we’ve got, our canned line that’s coming out, some new beef and pork products coming out in a region on the West Coast …

“We’re starting a lot of consumer retail execution during the next six to 12 months.”

The deli meats were featured in the firm’s annual post-meeting buffet — an elaborate spread of meats, hors d’oeuvres, dips, breads and other food products prepared for the 600 people in attendance. In addition to the boneless hot wings, which drew a crowd, selections such as Tyson Food’s Genoa salami and smoked hams and turkeys got rave reviews.

Although Tyson Foods’ first year of business after acquiring IBP Inc. in June 2001 helped grow its revenue to more than $23 billion — making it the second-largest food company in the Fortune 500 — the company’s board shrank from 15 to 10 members. (See stories at ArkansasBusiness.com).

Tyson, the grandson of the company founder, said the reason for the reduction was the recently enacted Sarbanes-Oxley Act of 2002 and other proposed amendments to the New York Stock Exchange listing requirements.

The Springdale meat producer also paid down $789 million in debt and was able to take advantage of more than $50 million in post-acquisition synergies — a combination that helped raise earnings by an additional 23 cents per share.

Those announcements highlighted the 40th annual event. But lost in much of the hoopla was the rollout of the new line of products. Tyson said the company will introduce new items in every category this year. But the deli line is a major initiative.

Bob Corscadden, Tyson Food’s senior vice president/chief marketing officer, said that’s because consumer research indicated that the “characteristics of quality and trust already attached to Tyson-branded chicken would transfer effectively” to new lines.

“The deli products are a logical extension of the brand into a category where freshness, high quality and premium taste are important,” Corscadden said. “We’ve already placed the products in most of the major chains nationwide. These products are designed to appeal to a growing preference for lighter, deli-style products. The natural shapes and quality ingredients make each slice look and taste as if it were sliced fresh in the deli.”

Consolidating manpower in its information systems and live-swine departments contributed to the synergy savings.

The stock repurchase program simply replaces the firm’s expired share repurchase plan, under which Tyson Foods had bought back about 15.8 million shares between July 1994 and February 2003. Use of cash to retire the firm’s nearly $4 billion in debt will be given first priority, however.