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  • "Impossible Foods beefed up its roster of meat alternatives." "It's a

  • burger that's become quite popular."

  • "Now, the meatless craze sweeping through grocery stores, restaurants,

  • even down the street at Carl's Jr." Despite the buzz around

  • plant-based alternatives and vegan recipes, Americans still love

  • meat. In 2018, Americans consumed more than 180 pounds of beef, pork

  • and poultry, 10% more than in 1970.

  • Plant based meat retail sales were $760 million dollars in 2019, a

  • fraction of the total meat and poultry sales.

  • Whether it's at your favorite fast food restaurant or in the grocery

  • aisle, one company that carnivores turn to again and again is Tyson

  • Foods. Tyson Foods is one of the world's largest food companies and

  • produces roughly 20% of the beef, pork and chicken in the U.S.

  • IT services restaurants and schools and sells brands like Jimmy Dean

  • and Sara Lee in supermarkets.

  • But in the spring of 2020, restaurants closed as governments enforced

  • social distancing rules.

  • And in April, thousands of infected Tyson workers at processing

  • plants caused facilities to shut down, causing meat shortages at

  • grocery stores across the country.

  • The 85-year-old food giant faced the perfect storm: higher production

  • costs, lower levels of productivity and softer demand.

  • "We've implemented a wide number of measures to look after our workers

  • from measuring temperatures as they come through the door.

  • Face coverings, staggered breaks, expanded room, social distancing.

  • All of these are designed to help keep our workers safe.

  • And keeping our workers safe is what will keep our plants running.

  • And, of course, where necessary, we've been willing to close those

  • plants and to deep clean them in order to make sure that we can get

  • back to speed as quickly as possible."

  • But analysts argue that after decades of industry consolidation, some

  • of Tyson's problems may have been self-inflicted.

  • "Covid-19 has exposed weaknesses in the meat system that people have

  • been talking about for years, but that have never been exposed as

  • they were now and essentially what Covid-19 showed was the profound

  • fragility that happens when you move all of your production into a

  • few slaughterhouses as possible."

  • So can one of America's biggest meat suppliers recover from the

  • devastating blows of 2020?

  • Or has the Covid-19 crisis created an opening for rivals JBS, Cargill

  • and Smithfield Foods to overtake them?

  • In the early 1930s, 25-year-old John Tyson left his family's farm in

  • Missouri in search of a better life.

  • The Great Depression meant jobs were scarce.

  • But after arriving in Arkansas, Tyson saw opportunity all around him

  • in the form of chickens.

  • Chicken was a delicacy in Midwestern cities at the time, so Tyson

  • loaded up his truck and started hauling birds to markets as far away

  • as Chicago and Kansas City.

  • In 1947, Tyson was not only transporting the chickens to market, but

  • also selling baby chicks and feed to farmers.

  • "Tyson Foods was at the forefront of the revolution in

  • vertically-integrated meat production.

  • And it's not like you can go back in time and point at one person as

  • being the, quote, inventor of vertically-integrated meat production.

  • But if you would, John Tyson Sr.

  • would be really close."

  • But it was Tyson's son, Don, who many credit with turning a simple

  • chicken business into a global empire.

  • Don joined the company after dropping out of college in 1952, built

  • the company's first processing plant, and became CEO in 1967 after

  • the death of his parents in a car train accident.

  • In 1963, Tyson went public, selling 100,000 shares at $10.50 each.

  • By the 1970s, there was an explosion of industrialized,

  • vertically-integrated poultry production in the U.S., with about

  • three dozen companies controlling half of the chicken market,

  • including Pilgrim's Pride, Sanderson Farms, Perdue Farms and of

  • course, Tyson.

  • "Chicken was really the first animal that was produced like a widget

  • on an industrial assembly line.

  • And so the amount of chicken that was available just exploded during

  • this time." By the late 70s, Tyson was producing over 230 million

  • birds per year. And with a grow-or-die philosophy, Don Tyson's

  • company started acquiring competitors and expanding the family

  • business. "Starting in about 1980, you see this enormous wave of

  • consolidation sweep across the industry, where a handful of companies

  • who have really good relationships with investors on Wall Street,

  • where they could raise the capital to go on a merger spree with Tyson

  • Foods being probably the premier company in this way.

  • They went out and bought their competitors and they rolled up

  • ownership into a handful of firms."

  • By the mid 80s, Tyson reached a billion dollars in sales and claimed

  • the number one poultry producing slot in the country.

  • The company went on a buying spree.

  • In 1989, Tyson bought Holly Farms for $1.5 billion dollars, doubling

  • the size of the company. And in 2001, it bought IBP for $3.2 billion

  • dollars, making it one of the world's largest meat producers and

  • processors. "Tyson made a business model out of buying out its

  • competitors and shutting down the older, smaller slaughterhouses and

  • moving more and more production into a handful of very large, highly

  • sophisticated slaughterhouses where they could add value to the

  • product." In 2014, Tyson bought Hillshire Brands for $7.7 billion

  • dollars. And in a bid to boost its sales at restaurants, in 2018,

  • Tyson bought McDonald's chicken nuggets supplier Keystone Foods $2.1

  • billion dollars.

  • In 2019, Tyson had a net income of $2 billion dollars, a 66% increase

  • from 2015. And by June 2020, Tyson had a market value of $21 billion

  • dollars, almost double the amount it had at the start of 2014.

  • The meat and poultry business in the U.S.

  • is a $232 billion dollar market, according to IBISWorld.

  • In 2017 alone, the industry processed 9 billion chickens, 121 million

  • pigs and more than 32 million cows for kitchen tables across the U.S.

  • While the scale is hard to comprehend, industry consolidation has led

  • to just a few key players.

  • The four biggest companies, Tyson Foods, JBS, Cargill and Smithfield

  • Foods, control anywhere from about 40 to 60% percent of supply,

  • depending on the type of animal.

  • Volatile commodity prices keep profit margins tight, forcing Tyson

  • and other meat processors to keep a close eye on costs.

  • Tyson has more than 200 plants in the U.S.

  • and had global sales of $42.4 billion dollars in 2019.

  • About a third of revenue came from the sale of beef, another third

  • came from the sale of chicken, and the remainder of the company's

  • revenue came from pork prepared foods and international sales.

  • The company sells about 45% of its products to retailers like

  • supermarkets, 31% to foodservice businesses like restaurants and

  • about 11% to packaged food companies.

  • The remainder of revenue comes from exports.

  • Tyson is the largest chicken producer in the U.S., followed by

  • Pilgrim's Pride. Pilgrim's has more than 30 plants in the U.S.

  • and processed about $1.7 billion birds in 2019.

  • The U.S. poultry industry has come under increased scrutiny in recent

  • years as consumers and grocery stores have accused Tyson Foods,

  • Pilgrim's Pride and other processors of inflating the price of

  • chickens. In June 2020.

  • Pilgrim's CEO Jason Penn, along with other chicken industry

  • executives, including Claxton Poultry Farms President, Mikell Fries,

  • were indicted for conspiring to fix prices on broiler chickens from

  • 2012 through 2017.

  • In a statement, Pilgrim's said the company is committed to high

  • ethical standards, governance, and free and open competition that

  • benefits both customers and consumers.

  • Tyson was not named in the indictment, but a few weeks later said it

  • was cooperating with the U.S.

  • Department of Justice on a price fixing investigation that could

  • shield the company from criminal prosecution.

  • Pilgrim' is majority owned by Greeley, Colorado-based JBS, which is

  • also one of the world's largest beef and pork processing companies

  • and a subsidiary of Brazilian-based JBS S.A.

  • "So chicken is ground zero, if you will, for this model of vertical

  • integration and consolidation that happened fastest and most

  • dramatically in the chicken business.

  • Well, then these companies realized what a huge opportunity this was.

  • So they essentially exported that model to beef and pork."

  • The beef category is also dominated by a handful of companies.

  • At the top of the pack alongside Tyson and JBS is Cargill, a private

  • company that has more than three dozen processing plants in North

  • America. "So a typical plant shift at, say, a pork or a beef or even

  • a poultry packing plant might have 800 to 1,000 workers or more on a

  • given shift. And they typically are close and oftentimes it's

  • challenging to have six foot six feet, rather, of social distancing."

  • In 2019, Cargill had revenue of $113.5 five billion dollars.

  • In the pork category, the biggest producers are Smithfield Foods, JBS

  • and Tyson Foods.

  • The world's largest pork producer.

  • Smithfield Foods, started operations in 1936.

  • The company grew rapidly with more than 30 acquisitions since 1981.

  • In 2013, Smithfield was bought by Hong Kong-based WH Group for $4.7

  • billion dollars. WH Group is publicly traded on the Hong Kong Stock

  • Exchange. While supermarkets were seeing shortages and higher prices

  • in 2020, China was receiving a record amount of pork exports from

  • U.S. companies. In June 2020 Democratic senators Elizabeth Warren and

  • Corey Booker sent a letter to chief executives of Tyson, Cargill,

  • Smithfield and JBS, criticizing them for exporting pork and other

  • meats to China while threatening the American public with impending

  • shortages. Tyson told CNBC in a statement, "In recent months, we've

  • prioritized supplying meat to the U.S.

  • domestic market and have voluntarily curtailed shipping those pork

  • export items that are also used by domestic consumers to try to meet

  • U.S. demand." The coronavirus