Last week, food traceability company FoodLogiQ announced that protein giant Tyson Foods will use its tech to improve food safety and increase transparency.
Tyson, which produces roughly one out of every five pounds of beef, chicken, and pork consumed in the U.S., plans to use FoodLogiQ’s tech to streamline supplier management and track their product throughout the supply chain. This could be valuable in the case of a recall of a contaminated product, but it’s also a useful branding tool for them in the age when people want to know everything about their chicken, from where it was raised to whether or not it had many friends.
This move in and of itself isn’t surprising, or even that remarkable. Tyson Foods is also an investor in FoodLogiQ and is already working with the Durham, North Carolina-based startup on their blockchain for food pilot. But it does illustrate Tyson’s mission to dominate the protein market throughout the supply chain.
Clearly, they’re doing pretty well. Not only does the corporation produce more meat than anyone else, they’ve also been investing pretty heavily in plant-based meat alternatives and cultured meat companies. This May, they led a $2.2 million seed round for Israeli clean meat company Future Meat just a few months after making an undisclosed investment in cultured meat company Memphis Meats. Tyson also nabbed a 5 percent stake in plant-based protein company Beyond Meat in 2016, and made a follow-up investment the next year.
Tyson Ventures CFO Tom Mastrobuoni shed some light on this investment strategy at the Smart Kitchen Europe in Dublin this June: “We’re on to disruption now,” he told the audience. “Some of the startups we’re investing in are out to get us.”
Investing in their competition is a smart move for Tyson. By diversifying their company, they’re hedging their bets; now and in the future, they want to be seen as a company that was on the cutting edge, not lagging behind. And as demand for plant-based protein grows, along with interest in forthcoming “clean meat,” their new investment strategy is getting them kudos and a ton of (chiefly positive) press.
Beyond Meat’s plant-based sausage patties.
Despite the buzz they’ve been generating about their alterna-meat investments, Tyson clearly isn’t done with its carnivorous ways. Last week they acquired meat supplier Keystone Foods — who most notably sold chicken for McDonald’s nuggets — for $2.1 billion.
On one hand, as Food Dive pointed out, this is a no-brainer. After all, Tyson Foods is known, first and foremost, for chicken production. Acquiring a company which supplies chicken to the second largest fast-food chain in the world makes sense. But it clearly illustrates that they’re not looking solely to alterna-meats for the future. Buying Keystone Foods is another step in Tyson’s journey to become the reigning global protein power; it seems like the company doesn’t particularly care which type of protein(s) that includes.
A logical investment for Tyson would be Seattle Food Tech, a startup working to industrialize the plant-based meat industry so that meat alternatives can be made at cheaply and at a large scale. We broke the news in April that the company had raised a $1 million seed round, and they were one of TechCrunch’s 10 favorite startups from the latest Y Combinator batch. They’re still pretty small-scale right now, but that would probably mean Tyson could get in at a decent price, and provide Seattle Food Tech with a way to scale its manufacturing process.
If we want to know what Tyson will do next, look to the consumer. As interest in food delivery, smart kitchen appliances, and food waste repurposing grows, Tyson has also started to invest in those spaces. Consumers have a growing interest in plant-based protein, but they’re also eating more meat than ever before. As long as people want chicken nuggets from, well, chickens, Tyson will give it to them.
Their “throw it at a wall and see what sticks” approach isn’t a bad one. In fact, their willingness to experiment and invest in newer companies — especially ones that seem to compete with them directly — is admirable, and displays some serious agility for such a large company.
It’s also unique. A few of Tyson’s competitors are also widening their scope to include meat alternatives, though none quite so thoroughly. Most notable is Cargill, which is the third-largest meat producer in the U.S., also invested in Memphis Meats. The fourth and fifth largest meat producers, Smithfield (which was acquired by the largest pork producer in China in 2013) and Hormel Foods have made no significant investment in alternative meat companies.
Tyson, which is the largest meat producer in the country, is also the one willing to experiment the most and invest in a wide range of their competitors. I think that their ability to keep a finger on the pulse of consumer trends — and then take action to get in on them — will keep them on top.
If you want to hear CFO of Tyson Ventures Tom Mastrobuoni speak more about Big Food investment strategy, join us at the Smart Kitchen Summit in Seattle on October 8-9th! Get your tickets here.
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