How Tyson Foods trying to survive the collapsing food supply chain during COVID-19

 

 

 

Hello all, My name is Vikas S Menon and i am a 2nd year MBA student at Amrita school of Business, Coimbatore. I hope you read my previous post. Now I am writing about Tyson Foods and collapse of its supply chain during COVID-19. Hoping for your feedback on the topic and area to improve.

Tyson Foods is one of the world’s largest food company which produces 20% of total meat in the US. American typically consumes more than 180 pounds of beef, chicken, and poultry in 2018 which is 10% more than in 1970. In 2019, the plant-based meat and meat and poultry retail sales were $760 million and $50.4 billion respectively. Tyson Foods service restaurants and colleges and markets brands like Jimmy Dean and Sara Lee in supermarkets. Tyson Foods was the forefront of the revolution in vertically-integrated meat production.

The 85-year-old food giant faced a higher cost of production, lower productivity, and lower demand. It was because Restaurants were closed after governments imposed social distancing guidelines and thousands of Tyson employees were diagnosed with coronavirus in processing plants. This led to the closing of the Facilities and the shortage of meat went up in grocery stores across the country. To make sure the facilities are fully functional, Tyson deployed infrared body temperature scanners at some US sites and plastic dividers to protect workers. Tyson doesn’t have paid sick leave but offers short-term disability to employees who are ill.

Plant closure has a ripple effect across other parts of the supply chain too. The hog processing capacity nearly cut in half, the farmers who struggling to find buyers were forced to euthanize excess animals. The pork and beef processing is down by 20% and 30% respectively. In August 2020, Tyson’s third-quarter profit declined by 22%. With coronavirus wreaking havoc in US processing plants, Tyson is looking to the horizon for its next-generation consumers. In 2019, Tyson CEO forecasted that 90% of future growth in global protein demand will take place outside the US. China has also seen a surge of US poultry imports since the country ended its ban on trade in 2019 November. Tyson is expecting to import more chicken to china and pork as the Chinese are larger consumers’ pork and now they have a significant shortage, so this will benefit Tyson in long terms. Tyson is expanding their market as the number of vegan and vegetarians in the US over the past decade has remained constant which led to an interest in plant-based foods is on the rise. The consumption of plant-based food increased during the pandemic as consumers continue to adopt healthier diets while facing shortages of meat at grocery stores.

Tyson, one of the investors in Beyond Meat, launched its first plant-based product in 2019. In the same year, they rolled out chicken-less chicken nuggets and blended burger that combines plants and beef. Still, Tyson’s structural problems could come back as they get into new markets. Tyson planning to overcome the pandemic effects on plants but they are forced to do a selective shutdown of plants which indicates the supply chain issue will remain as it is currently.