Tyson Reduces Antibiotic-Free Beef Options As Costs Rise: Report

Tyson Foods Inc TSN is reportedly scaling back its antibiotic-free beef products following a similar move with chicken last year.

The company informed a major customer in late 2023 that it would no longer supply antibiotic-free beef and would limit its Open Prairie Natural Meats brand starting in January, according to a report from Bloomberg. Tyson’s decision reflects a broader shift in its product offerings.

Two decades ago, Tyson began producing some antibiotic-free beef in response to consumer demand. However, rising costs and increased regulations have made this approach less feasible.

Despite concerns about antibiotic resistance, Tyson reintroduced certain antibiotics in its chicken production last summer, claiming they do not pose a human health risk. Now, Tyson is also reducing its antibiotic-free beef options.

The report highlighted that the U.S. beef herd is at its smallest in seven decades, leading to record-high cattle prices. Although beef prices are increasing, they are not enough to offset the high costs, impacting Tyson’s profitability.

The company reported a second-quarter FY24 sales decline of 0.46% year-on-year to $13.072 billion, missing the consensus estimate of $13.157 billion.

Also Read: Tyson Foods CFO, Great-Grandson Of Founder, Suspended After Second Arrest

Producing antibiotic-free beef is more expensive, requiring additional hygiene measures and tracking throughout the supply chain.

Consumer visits to restaurants are declining, but sales of antibiotic-free beef at grocery stores are outperforming the overall market.

According to Circana, antibiotic-free beef represents 6% of fresh beef sales and has seen a 10% increase in sales volume over the past year, per the report.

However, Tyson’s changes raise questions about the future role of antibiotics in the meat industry, as producers and restaurants had previously pledged to reduce antibiotic use.

Price Action: TSN shares closed higher by 0.39% at $57.36 on Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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