Tyson Foods Inc. is developing more convenience-store products such as snacks and prepared food items for on-the-go consumers.
The convenience-store market is appealing to Tyson because it makes the Springdale-based company hundreds of millions of dollars and has strong growth potential, President Tom Hayes said.
"Since we combined efforts in Tyson and Hillshire [Farms], we've grown [convenience-store business] more than 75 percent in the last three years," Hayes said Monday during the company's fourth-quarter earnings call.
Convenience stores account for one-third of all U.S. retail outlets -- almost 155,000 stores in December 2016, Nielsen data shows. This is significantly higher than the nation's 51,191 supermarkets, 43,636 drugstores and 28,832 dollar stores, according to the National Association of Convenience Stores.
Recent acquisitions from sandwich packer AdvancePierre and cheesesteak producer Philly Holdings have beefed up Tyson's prepared-foods business by expanding its U.S. distribution network and product portfolio.
Excluding fuel, U.S. convenience stores had record sales of $233 billion in 2016, according to the National Association of Convenience Stores. And roughly 22 percent of sales came from the food-service category, with prepared food and packaged sandwiches generating $35 billion in sales, data showed.
Today consumers want more protein and more fresh packaged food items, said Sally Grimes, president of Tyson's prepared-foods business, during the recent Barclays Global Consumer conference.
According to Tyson's fourth-quarter earnings data, Tyson's total prepared-food sales were higher than most competitors including Mars, Hershey's, Campbell's, ConAgra and General Mills, for the 52 weeks ending Oct. 1. Hershey's showed higher volume sales.
"Channels are blurring," Grimes said at the event. "Grocery stores are becoming 'grocerants' and convenience stores are becoming [quick-service restaurants] and fresh-food destinations."
Factors such as the Internet, millennial spending habits and the ever-changing retail landscape have disrupted the market and prompted Tyson and competitors to adapt, said retail analyst Carol Spieckerman.
"Many are seeking new distribution opportunities as their core retail partners push further into private label and as retailers consolidate and/or close stores," Spieckerman wrote in an email.
Meanwhile, millennials are frequenting convenience stores and gas stations for meals -- not just snacks, Spieckerman said.
"With these dynamics as a backdrop, Tyson is smart to focus on the convenience channel and to create products that are targeted to it," she said in a statement.
Tyson this year unveiled meal kits, beef and cheese snack pairings and on-the-go breakfast items.
Convenience Store News selected three of Tyson's food products as winners for its 2017 Best New Products Awards competition: a western-style omelet wrap from AdvancePierre; a bacon gouda chicken sausage from Hillshire Farms; and ham and cheese stuffed breadsticks from Tyson.
Fresh sandwiches and wraps have made gas stations and quick stops more viable than retailers that sell convenience goods, said Jeff Lenard, vice president of strategic industry initiatives at the National Association of Convenience Stores.
"Who doesn't look like a convenience store at the register?" he said. "You go to Bed Bath and Beyond, Home Depot, Best Buy, they all sell items at the register. ... If you're not, you're history."
There are 1,817 convenience stores in Arkansas, according to the National Association of Convenience Stores.
Business on 11/18/2017
Print Headline: Tyson expands snacks, fast eats