A large reason why meat prices continue to increase, King said on the earnings call, has to do with the costs of labor, grains, live animals, and transportation. The CEO defended the company’s price increases as par for the course given current inflationary conditions.
“Average sales price trends reflect disciplined revenue management strategies in the context of a volatile, high-inflation environment,” King said.
Overall meat prices have seen a yearly increase of 14.8%, according to recent BLS data. While Tyson claims it is not passing along unreasonable costs, it has still been making a large sum of money. Tyson’s most recent sales slightly increased over the previous quarter, during which it sold $12.9 billion. According to Food Dive statistics, Tyson has seen its sales compared to a year before increase between 11.8% and 24.5% in its most recent four quarters.
In the most recent quarter, the amount of both beef and chicken Tyson sold only increased 0.6% compared to a year ago, so the company only sold a marginally higher amount of meat than before inflationary pressures took hold.
In order to meet demand for meat, the company has introduced efforts to improve its operations and expects to spend $1 billion on productivity measures by the end of 2024. In terms of product volume, King said that the company is currently “not where we expect it to be” because of the continued impact of the COVID-19 pandemic along with continuing labor and supply chain issues.
Along with boosting the number of truck fleets transporting its products, King said Tyson also views automation as key to solving capacity constraints, with new programs already in the pipeline.
“In our supply chain, we are leveraging new processes and digital tools to quickly identify gaps in fulfillment,” King said. “Looking ahead, we’re starting to scale new programs like pack-out robotics to continue automating highly manual processes and deliver savings.”
It remains to be seen if Tyson’s meat sales figures will get any higher or if this is as large as they will get. Its chicken sales could continue to benefit from high beef prices. A recent CoBank analysis found consumers are willing to “trade down” to poultry if they perceive beef to be too expensive. Tyson also sells beef through brands including Jimmy Dean and Hillshire Farm. King indicated on the earnings call that he expects to see headwinds in that sector in the second half of the year, mainly because of transportation costs.
Sen. Elizabeth Warren (D-Mass.) has directly called out Tyson for its profits, stating that it is “bragging” to investors about inflation being a great opportunity for them. Warren has called for a crackdown on price-gouging. At a hearing in the House of Representatives last month, King defended Tyson’s record-breaking earnings, saying the meat industry is the “most transparent in the world” as producers are required to report the prices they pay for cattle and the prices at which they sell their beef twice a day to the USDA.