Tyson Foods, Inc. (TSN Quick QuoteTSN - Free Report) has strategically increased its presence through capacity expansions. The renowned leader in protein is well placed to capitalize on the rising demand for protein-packed brands.

Let’s delve deeper.

Capacity Expansions Driving Growth

Tyson Foods is undertaking several operational and supply chain efficiency programs to position itself better in the long run. The company continues accelerating digitalization via supply chain planning and execution processes to enhance customer service. Management is optimizing its plant network by adding fully cooked capacity, converting plants for value-added production, executing plant flexibility and enhancing the portfolio mix. In its last earnings call, management highlighted investing in new plants and expanding existing capacity across its global network.

The company has eight plants under construction, with two envisioned to start operation during fiscal 2022, while the other six would begin by the end of fiscal 2023. The incremental capacity will help the company counter capacity constraints, accelerate value-added growth and meet the rising consumer demand for protein. Management expects to invest nearly $1.9 billion in fiscal 2022, focused mainly on new capacity and automation objectives.

Tyson Foods is focused on efforts to expand into international markets as part of its strategic growth plan. In Jul 2022, the company announced its strategic partnership with Tanmiah Food Company (Tanmiah) — a leading Middle Eastern provider of fresh and processed poultry, other processed meat products, animal feed and health products. The acquisitions will allow Tyson Foods to access poultry supplies across Saudi Arabia to cater to the rising protein demand in the Middle East and other markets.

Several other companies in the food space, like The Kraft Heinz Company (KHC Quick QuoteKHC - Free Report) , Hormel Foods Corporation (HRL Quick QuoteHRL - Free Report) and McCormick & Company, Incorporated (MKC Quick QuoteMKC - Free Report) , are benefiting from acquisitions.

In April 2022, Kraft Heinz acquired a majority stake in a Brazil-based condiments and sauces company — Companhia Hemmer Industria e Comercio ("Hemmer"). The buyout has widened Kraft Heinz's International Taste Elevation platform and enhanced its presence across emerging markets. In January 2022, KHC acquired an 85% stake in Germany-based Just Spices GmbH (“Just Spices”). The buyout enhanced its direct-to-consumer operations and go-to-market expansion.

Hormel Foods is strengthening its business through strategic acquisitions. In June, HRL acquired the Planters snacking portfolio from Kraft Heinz. Prior to this, it acquired Texas-based pit-smoked meats company Sadler's Smokehouse in March 2020. The buyout was in sync with Hormel Foods’ initiatives to strengthen its position in the foodservice space.

McCormick strategically increased its presence through acquisitions and strengthened its portfolio. In December 2020, MKC bought a 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick acquired the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand.

Strength in Protein-Packed Brands

Tyson Foods focuses on higher protein production to cater to the rising demand for protein-packed food. It boasts a rich portfolio of protein-packed brands that are growing rapidly across the globe. The company has undertaken divesture of non-protein businesses to focus on the growing protein-packed food arena. TSN has been steadily expanding its fresh prepared foods offering, owing to consumers’ rising demand for natural fresh meat offerings without any added hormones or antibiotics.

We believe that such upsides and prudent expansion efforts will likely keep Tyson Food positioned in the meat foods space.