Dive Brief:

• As sales stagnated over last year, Tyson Foods improved operating income to $312 million in the second quarter, driven by recovery efforts in its chicken operations as consumers pulled back on food spending.

• Sales totaled $13 billion, unchanged from last year. Meanwhile, operating income for chicken soared to $158 million as processing efficiencies improved following the closure of six plants. These tailwinds offset headwinds from beef and pork and built on solid income from Jimmy Dean, Hillshire Farms and other prepared foods items.

• Despite improvements in parts of the company, John R. Tyson, executive vice president and chief financial officer, signaled a cautious third-quarter outlook to investors, with uncertainties around consumer behavior, the cattle cycle and commodity costs.

Dive Insight:

Although inflation is pushing some consumers to rethink purchases, the trend could benefit Tyson as shoppers focus more on staples and less on snacks or other discretionary purchases, according to Melanie Boulden, Tyson’s group president of prepared foods and chief growth officer.

“The inflation impact coupled with historically low savings rates has created a more cautious, price-sensitive consumer, and we’re also seeing a cautious consumer prioritize essential staples over discretionary categories,” Boulden said.

Because of Tyson’s massive scale and variety of products, John R. Tyson said “We’re in a pretty good position to win no matter where consumers are shopping.”

“We see the rest of the year as being fairly balanced, but just with all of the various factors at play and some seasonality in pork especially – there could be a tweak there,” Tyson said.

After three years of cumulative inflation, consumers are fed up with higher costs for food and everyday expenses and becoming more selective about where and how they spend their money.

This is causing some retail and food service slippage as consumers choose private-label over premium brands and enjoy more meals from home instead of dining out. The company is focusing its efforts to expand offerings in seasoned and marinated meats to provide shoppers with more “convenient restaurant-quality food options at home,” CEO Donnie King said on an earnings call.

As second-quarter sales stagnated over last year, operating income improved to $312 million, driven by recovery efforts in Tyson’s chicken segment.

Although the company continues to struggle with high mortality and genetics issues in chicken, King said operations are running well and more efficiently amid lower global grain costs.

Tyson recently shuttered the last of its six chicken processing plants announced for closure last year, along with two case-ready beef facilities to cut costs and reallocate resources. The company is also in the process of closing one of its pork plants in Iowa.

“Together, we delivered a solid first half. We still have more work to do and believe we have the strategy in place to continue our progress and deliver long term shareholder value,” King said in an earnings call.

Still, the company expects third-quarter results could be weaker than the fourth quarter.

“Historically Q3 has performed better than Q4, but we’re seeing higher commodity costs in Q3,” Boulden said.

After releasing its second-quarter earnings, Tyson’s shares closed Monday at $58.50, down 6% from Friday on the New York Stock Exchange. They fell more than 9% in morning trading.

State and federal officials are urging cattle operators to beef up their biosecurity as researchers run diagnostics and genome sequencing to better understand why highly pathogenic avian influenza, also known as bird flu, is infecting dairy livestock at several farms.

“What we have seen in dairy cattle in Texas appears to be the same H5N1 strain in wild birds,” Erin Robinson, director of communications at the Texas Animal Health Commission, told Agriculture Dive on Wednesday. “While we aren’t 100% sure how this is transmitted to dairy cattle, it is something of note to mention.”

Since the first cases were reported early last week, the U.S. Department of Agriculture has confirmed the detection of avian influenza in dairy herds in Texas (7), Kansas (2), Michigan (1), New Mexico (1) and Idaho (1), as of April 2. The agency created a page that is being updated with the latest cases here.

State and federal health officials have determined avian influenza reached dairy herds via infected wild birds, but they cannot rule out the possibility of cow-to-cow transmission as the virus spreads. This incident marks the first time the flu was found in cows. 

According to the USDA, there is no concern of avian influenza getting into the nation’s milk supply due to regulatory practices and pasteurization, which would kill the virus. The public health risk remains low, federal and state officials said.

While there are no federal quarantine orders in place for infected cattle, some states are issuing commerce restrictions. This week, Nebraska reported it will require producers who are importing breeder female dairy cattle to obtain a state permit prior to entry. The USDA is encouraging strong diligence by stakeholders to ensure only healthy cattle are moving across state lines.

One of the biggest questions researchers are working on is why certain cattle are more susceptible to the virus than others. Currently, older dairy cows are more likely to test positive and exhibit avian influenza symptoms, while young and mid-lactation cattle are less likely to contract the disease, Robinson said. There also have been no confirmed reports of the virus in cattle raised for beef.

“We don’t have an answer for” why the virus spreads to certain animals over others “but we are looking into the specifics,” Robinson said.

Robinson urged dairy farmers to be proactive in reporting when they start to see bird flu symptoms in their cattle and to follow enhanced biosecurity measures, such as limiting the number of people on their operations and housing their animals separately by species.

“Farmers practice biosecurity on a day-to-day basis, but there may be enhanced biosecurity plans that many have and hope not to have to use,” Robinson said. “Now would be a good time to start implementing those. And if they don’t have those, creating those habits or implementing those practices is simple.”

She recommended producers to follow guidance from the Secure Milk Supply, a collaborative federal, state and university-led project funded by the USDA. There are manuals, checklists, forms, posters and other resources available online to help enhance livestock biosecurity plans. 

As the virus emerges in dairy cows, the USDA also published guidance for animal health officials, veterinarians and producers to follow. The agency recommended farmers monitor their dairy herds closely for decreased milk production, reduced appetite, fever or thickened discolored milk. 

Other recommendations include minimal movement of cattle and for persons working with or around cows suspected or confirmed to be infected with bird flu to wear personal protective equipment. A person tested positive for avian influenza after presumed contact with dairy cattle in Texas, state health officials confirmed earlier this week.

Compared to when bird flu is detected in commercial and backyard poultry, the protocols for cattle are currently less severe.Typically, birds that test positive for the virus are killed. Earlier this week, egg producer Cal-Maine temporarily said it ceased production at its Parmer County, Texas facility due to avian influenza, resulting in the organized killing of nearly 2 million birds.

As researchers learn more about the H5N1 strain infecting cattle, the livestock are being isolated from their herds, treated for their illness and in many cases are recovering, Robinson said.

“There has been little to no mortality reported in animals that have been affected,” she said.

The USDA’s National Veterinary Services Laboratories are working on presumptive positive tests from Kansas, New Mexico, Ohio and Texas.

CHICAGO — Blommer Chocolate Co., a wholly owned subsidiary of Fuji Oil Holdings, will close its Chicago manufacturing plant. The facility is Blommer’s original manufacturing plant that opened in 1939.

“The location and age of the Chicago facility coupled with increasing repair and maintenance of the building and equipment has elevated operating costs and created production reliability issues,” Blommer said.

Blommer said its corporate headquarters, the applications laboratory and new research and development center will remain in Chicago at the Merchandise Mart. Fuji will continue to expand the lab capabilities in Chicago Merchandise Mart and create a new R&D center that will support future development, concept testing, processing and ingredient research, continued application evaluation and creation to enhance the customer experience. The new facility will open later this fall, Blommer said.

“It was an incredibly challenging yet inevitable decision to close the Chicago plant,” said Mark Okita, chief operating officer and senior vice president of commercial. “However, in order to propel Blommer to the next level, we must embrace progress, transformation and elevation. Our planned expansion to the Campbellford Canada operation is the next step toward our transformation. This marks a new chapter for us as Blommer, as well as our customers. It is imperative that we challenge ourselves aggressively to ensure that this becomes the best chapter yet.”

Blommer said the closing allows the company to focus on other manufacturing facilities — namely those in East Greenville, Pa.; Union City, Calif.; and Campbellford, Ont., respectively — and will invest $100 million in these three facilities.

“One of the major factors in the Blommer transformation is expanding our service to the specialty confectionery coating business by investing in the Campbellford facility,” said Neil Fulton, general manager – Campbellford. Blommer said it will invest $60 million to make the Campbellford facility one of the largest confectionery coating manufacturing facilities in North America, with the additional capacity coming online in April 2026.

Meanwhile, more than $40 million is planned for the company’s East Greenville and Union City facilities. The funds will be used to increase operational efficiency and reliability, as well as automate processing and packaging equipment, Blommer said.

High-protein, whole-grain food company Kodiak named Steve Katzenberger as its chief operating officer. 

Katzenberger joins Kodiak after working for two years at Campbell Soup where he served as senior vice president of supply chain. Before his time at the soup and snacks giant, he held top positions at Hearthside Food Solutions and Kraft Foods.

In a statement, Kodiak said Katzenberger’s “wealth of experience and proven track record of success will be invaluable as the brand continues its growth trajectory.” Katzenberger replaces Jeremy Bruno, who left the company last month.

“Kodiak has already made such remarkable progress and has become one of the biggest players in its industry,” Katzenberger said. “By joining this team, I look forward to combining my expertise with the unique position the brand has to continue to propel it forward.”

Kodiak also announced that it hired Sonali Dalvi as vice president of product development, a newly created role at the Utah-based company. Both Katzenberger and Sonali will report Val Oswalt, Kodiak’s CEO. Oswalt was hired in 2022 from Campbell Soup to replace co-founder and CEO Joel Clark. 

Dalvi has previous experience leading research and development for companies including Olam Food Ingredients, PureCircle, PepsiCo and Quaker Foods. Kodiak said she “will be the driving force behind new innovations” that will open “a wealth of opportunities” for the brand.

Kodiak traces its roots to the early 1980s when a family pancake recipe was packaged in brown paper lunch sacks and sold to people in Salt Lake City from the back of a red wagon. It has since expanded its product offerings by moving into frozen waffles, oatmeal, baking mixes and a variety of snack products. L Catterton purchased a majority stake in the fast-growing Kodiak for an undisclosed amount in 2021.

BROOKLYN, NY. — Better-for-you soda brand United Sodas of America has named Dan Herndon as its president. In addition, the company has hired Carli Nicholas as its head of marketing.

As president, Herndon will help grow the company across all channels and realign strategies, investment choices, structure and organization, and operations, the company said. Herndon will oversee the company’s day-to-day team.

Before joining the company, Herndon was most recently vice president of sales and marketing for Hazelnut Growers of Oregon Cooperative, and previously vice president of sales at Peeled Snack. He also has been senior vice president of client development at Acosta sales and marketing.  

Craig Roscoe, co-founder and chief executive officer of United Sodas, will continue to oversee the brand’s vision and investor relations.

Nicholas will lead the brand’s e-commerce growth, guide its creative direction, and oversee communications, digital marketing, public relations, social, community, influencers, and advertising

A deadly wave of bird flu has infiltrated commercial farms throughout the U.S. and is devastating poultry growers in California. Once again, in what seems like a repeat of this time last year, the spread threatens to raise egg prices ahead of Easter.

Approximately 1.96 million birds raised for domestic meat or egg consumption in California were culled in January alone to prevent the spread of highly pathogenic avian influenza, according to the U.S. Department of Agriculture. Detections were found at seven commercial chicken, egg or turkey farms.

The monthly uptick is more than half of all the birds affected by the virus in California since October 2023, according to the data. Most of the commercial cases are contained to four counties, including Sonoma County, where local officials declared a state of emergency following two detections in early December.

As cases continue to climb and more birds are depopulated, Brian Earnest, a protein analyst with CoBank, said it will be difficult to replace the amount of poultry and eggs leaving the market, especially in California where there are cage-free laws that prohibit sourcing from conventional eggs.

“Overall, the market hasn’t seen much impact yet,” Earnest said. Retail and wholesale prices have seasonally weakened after growers rebuilt their flocks and production improved following the worst poultry disease outbreak on record. However, after months without any bird flu detections, the U.S. market outlook has grown murky again with HPAI’s reemergence in fall 2023.

Typically, egg production picks up at the end of the year, when consumers are doing a lot of baking and cooking for the holidays, Earnest said. After that, production winds down to give the industry a sigh of relief and an opportunity for some retooling. But prices could rise once demand picks up again in March, Earnest said, “especially if bird flu continues to be a detriment to the overall supply.”

“I expect as we get closer to Easter to be in a tight supply situation,” he said. “Those cage-free markets are going to see more shelves that are empty compared to other markets.”

Approximately 58.5 million birds were culled between February 2022 and 2023 as a result of the spread of bird flu. Nearly 76% of the total came from table egg operations, sending prices skyward as shoppers grappled with inflationary pressures. Following this period, growers worked to rebuild their flocks and get production back on track as bird flu cases waned. Virtually no commercial detections occurred between April and October of last year, according to data.

Fast-forward to today and the situation has significantly changed. Upper Midwest states were strongly affected by HPAI late last year. About 6.5 million birds, mostly turkeys, were culled in Minnesota and South Dakota from October to December, according to USDA data. While cases have subsided there, Indiana this week reported its first case in over a year at a commercial turkey farm. 

Approximately 81.74 million birds from U.S. commercial and backyard flocks have been affected since the outbreak began February 2022, according to USDA data.

“We didn’t see this coming six months ago,” Earnest said. “Most experts were getting optimistic that it wouldn’t reappear and lo and behold it popped up.”

Extreme weather could be to blame

Earnest said part of this change in activity could be from the extreme winter temperatures that recently rolled across the country. Wild migratory waterfowl often spread the disease to commercial farms and backyard flocks through their droppings and nasal discharges.

In the winter months, millions of waterfowl migrate to California for its warmer climate, said Maurice Pitesky, an associate professor at the University of California, Davis School of Veterinary Medicine. The proliferation of backyard flocks near commercial operations also “can be a recipe for disaster” once waterfowl get in the mix, he said.

“Wildlife are good at interfacing in all kinds of ways,” Pitesky said.