Innovation, Efficiency Are Keys to Tyson's Continued Success


NEW YORK, Nov. 29, 2006 (PRIME NEWSWIRE) -- Innovation and cost efficiency are strategic to the future success of Tyson Foods, Inc. (NYSE:TSN) and, according to two key Tyson executives, the company is making strides in both areas.

Wendy Davidson, senior vice president of Food Service National Accounts, and Jim Lochner, senior group vice president of Fresh Meats and Margin Optimization, both spoke Wednesday at the JP Morgan Consumer and Retail Holiday Conference in New York City.

Davidson told analysts and investors how the company is fostering product innovation and customer satisfaction. "Because of our business presence in both foodservice and retail, we're uniquely positioned to understand the consumer 24-7," said Davidson. "We know where they eat and what they crave, 24 hours a day, seven days a week. Our ability to capitalize on this insight is a tremendous benefit as we seek to drive sales growth."

Tyson's customer support efforts include a product development process called "Discovery," which is designed to drive innovation in products and services by understanding the customer's customer. "Our approach to new product innovation in foodservice is to partner with our customers from innovation to execution," Davidson said. "Understanding the consumer and our customer's business needs allows us to work jointly on new products to drive their business, which in turns drives ours."

Davidson said Tyson's product innovation efforts will soon get a major boost from the company's new Discovery Center, named after the company's customer innovation process. This new R&D facility is scheduled to open in January 2007.

"We will be the only company in the industry with consumer research, 19 development kitchens, a federally-inspected pilot plant handling all three proteins and more than 100 certified culinologists on staff to bring ideas to market in a matter of days," she said.

Another Tyson customer resource is called "Meat Max," a category management process, which goes beyond simple stock keeping unit (SKU) management to include trade area and consumer analysis to market the product at the right time and place. Tyson is the first to offer this complete category management tool to the foodservice marketplace with initial results impacting customer growth by over 10%.

Davidson also noted that while Tyson is known for center-of-the-plate chicken, beef and pork, the company's products span the entire menu, from appetizers, bacon, chicken sandwiches and pizza ingredients to desserts, deli meats and soups. For example, she pointed out the company's market share of 40% in the production of pepperoni, an estimated 25% share of the chicken appetizer market, a 10% share of the bacon market and a greater than 30% share of the pizza crust and toppings business.

Lochner highlighted the ways the company is managing costs and revenues in its commodity and value-added businesses.

"The focus in our commodity businesses is on execution and innovation," he said. "This means execution in manufacturing to improve yields and labor costs, and innovation in pricing and risk management to maximize revenues."

For example, yield maximization is critical when you consider the number of livestock the company processes, according to Lochner. "In beef, a mere 0.5% yield gain or loss is the equivalent of more than $60 million in revenue when you consider the number of cattle we handle annually."

Lochner also emphasized the importance of moving more of the company's products up the value chain, through additional processing and/or cooking. More than 70% of Tyson's poultry products are considered value-added and a growing percentage of the company's beef and pork products are also in value-added categories.

"This gives us the opportunity to improve our return on sales as it decreases our percentage of sales dollars in raw material costs," said Lochner. For example, it gives the company an advantage over commodity poultry producers, since input costs such as grain represent a lower percent of sales.

"We're driven to be the low cost, high revenue protein company in all three species and to use our value added mix and growth of that mix to our competitive advantage," he said.

Tyson Foods, Inc. (NYSE:TSN), founded in 1935 with headquarters in Springdale, Arkansas, is the world's largest processor and marketer of chicken, beef, and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500. The company produces a wide variety of protein-based and prepared food products, which are marketed under the "Powered by Tyson(tm)" strategy. Tyson is the recognized market leader in the retail and foodservice markets it serves, providing products and service to customers throughout the United States and more than 80 countries. The company has approximately 107,000 Team Members employed at more than 300 facilities and offices in the United States and around the world. Through its Core Values, Code of Conduct and Team Member Bill of Rights, Tyson strives to operate with integrity and trust and is committed to creating value for its shareholders, customers and Team Members. The company also strives to be faith-friendly, provide a safe work environment and serve as stewards of the animals, land and environment entrusted to it.

Forward-Looking Statements

Certain information contained in the press release may constitute forward-looking statements, such as statements relating to the opening and effectiveness of the "Discovery Center." These forward-looking statements are subject to a number of factors and uncertainties which could cause the company's actual results and experiences to differ materially from the anticipated results and expectations, expressed in such forward-looking statements. The company wishes to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Among the factors that may cause actual results and experiences to differ from the anticipated results and expectations expressed in such forward-looking statements are the following: (i) fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, or feed grains (including corn), and energy; (ii) the company's ability to realize anticipated savings from its cost reduction initiatives; (iii) market conditions for finished products, including competition from other global and domestic food processors, the supply and pricing of alternative proteins, and the demand for alternative proteins; (iv) risks associated with effectively evaluating derivatives and hedging activities; (v) access to foreign markets together with foreign economic conditions, including currency fluctuations, and import/export restrictions and foreign politics; (vi) outbreak of a livestock disease (such as avian influenza (AI) or bovine spongiform encephalopathy (BSE)) which could have an effect on livestock owned by the company, the availability of livestock for purchase by the company, consumer perception of certain protein products or the company's ability to access certain domestic and foreign markets; (vii) successful rationalization of existing facilities, and the operating efficiencies of the facilities; (viii) changes in the availability and relative costs of labor and contract growers, and the ability of the company to maintain good relationships with employees, labor unions, contract growers and independent producers providing livestock to the company; (ix) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (x) changes in consumer preference and diets, and the company's ability to identify and react to consumer trends; (xi) significant marketing plan changes by large customers, or the loss of one or more large customers; (xii) adverse results from litigation; (xiii) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xiv) changes in regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws and occupational, health and safety laws; (xv) the ability of the company to make effective acquisitions and successfully integrate newly acquired businesses into existing operations; (xvi) effectiveness of advertising and marketing programs; (xvii) the results of the Company's on-going tax account balance review; and (xviii) the effect of, or changes in, general economic conditions.



            

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