Tyson Foods, the largest U.S. meat processor, has a stake in Beyond Meat that makes plant-based meat patties and could someday buy the California-based company. Ditto with Memphis Meats, a Silicon Valley lab-grown meat startup and another Tyson investment. Consumers are not likely to see slaughter-free chicken or steak in the grocery store anytime soon, but Tyson is preparing for that eventual possibility.
In the near future, alternative proteins will not take much of a bite out of Tyson’s core business of beef, chicken, pork and prepared foods, which brought in more than $38 billion in revenue last year. But as more consumers shift toward foods they consider to be healthier and more sustainably sourced, Tyson’s Chicago-based venture capital arm — a team of three men — wants to meet them there. Other food companies like Campbell Soup, General Mills and Kraft Heinz also have venture capital funds, a relatively new and growing trend in the traditional processed food industry.
“If we are not aware of it and participating in our own disruption, we basically deserve what we get,” said Tom Mastrobuoni, chief financial officer for Tyson Ventures. “Shame on us,” added Reese Schroeder, the venture fund’s managing directors.
Tyson, like other giant food corporations, is using venture capital investments to partner with emerging food startups focused on sustainability and technology. Launched in 2016 with $150 million, Tyson Ventures now has stakes in four companies. The amounts of the investments are undisclosed, but it owns less than 20 percent of each startup. While Tyson could acquire these companies outright, other outcomes are also possible, including early exits and joint ventures.
Justin Whitmore, the boss and third member of the Tyson Ventures team, emphasized that Tyson’s many farmers and ranchers will still be key to the company’s global future. But he also acknowledged a shift in the company’s mission since CEO Tom Hayes took over last year. Under Hayes, Tyson is striving to be a protein company, not just a meat company, Whitmore said.
“I can’t express enough that we do see a world where there will be multiple types of protein products available. That could include (plant)-based protein next to pork, next to maybe even lab-grown protein and consumers will have a choice,” said Whitmore, Tyson’s chief sustainability officer.
Only one out of every six American consumers eat meat alternatives at least once a week, according to the global market research firm Mintel. But that number will likely grow, as reflected by an increasing number of faux meat options on restaurant menus, said Billy Roberts, senior food and drink analyst at Mintel. Tyson’s venture capital investments are “a really good way of diversifying in case interest in meat alternatives continues to take off,” Roberts said.
In general, the venture capital investments represent a low-risk way of “dipping a toe” in emerging protein and technology trends, said Zain Akbari, a Morningstar analyst, who covers Tyson Foods.
