Demand trends
The foodservice channel is witnessing a recovery with around 76% of US states at over 75% capacity for in-restaurant dining. The company’s findings show that 72% of customers are somewhat comfortable eating outside at a restaurant while 55% are comfortable eating inside a restaurant.
Tyson indicated in its presentation that the consumption of protein remains strong with 54% of consumers deliberately adding protein to their daily diet. In addition, 20% of consumers are eating animal protein more often than they were a year ago.
Even though consumption of animal protein remains strong, there is a growing demand for alternative protein offerings. To meet the rising demand for plant-based protein options, Tyson rolled out three new products under its Raised & Rooted brand. The company also expanded its alternative protein offerings to the Europe and Asia-Pacific markets.
Although Tyson has warned that inflation is likely to hurt its margins during the latter half of 2021, experts are hopeful that the strong demand for protein might help the company get through this difficulty.
Outlook
For 2021, USDA expects domestic protein production i.e. beef, pork, chicken and turkey to increase less than 1% compared to 2020. Tyson expects worldwide demand for food and protein to continue to increase over time despite some near-term shifts and disruptions.
USDA estimates domestic production will increase nearly 3% for beef and less than 1% for pork in 2021 compared to the previous year. USDA projects a slight dip in chicken production for this year compared to the previous one while Tyson expects feed costs to increase this year. Tyson expects sales to range between $44-46 billion in fiscal year 2021.
Click here to read the full transcript of Tyson Foods Q2 2021 earnings conference call