Published on 18 Oct 2023 on Zacks via Yahoo Finance
Tyson Foods (TSN) & Protix to Build Insect Ingredient Facility
Tyson Foods, Inc. TSN recently entered into a partnership with Protix, a leading Netherlands-based company specializing in insect ingredients.The collaboration will leverage Tyson Foods’ global scale and expertise in the meat industry and Protix’s proficiency in the insect industry to support scale production of insect ingredients and cater to its growing demand. This will help drive the insect ingredient industry’s growth, apart from expanding the use of insect ingredient solutions in proteins and lipids in the global food system.Per the agreement, Tyson Foods will obtain a minority stake in Protix through a direct equity investment that would likely support the latter’s global expansion. Apart from opening a new revenue stream, the strategic investment is expected to support Tyson Foods in driving growth and innovation across its core protein platform and creating more sustainable food solutions. The company expects global demand for protein to continue rising and remains well-placed to cater to it.As revealed, both companies have also decided to form a joint venture for the construction and operation of an insect ingredient facility in the continental United States. Once completed, it will be the first facility to specialize in upcycling food manufacturing byproducts into insect proteins and lipids for use in the aquaculture, pet food and livestock industries. The facility will incorporate an enclosed system to support the entire process of insect protein production, including breeding, incubating and insect larvae hatching.
What’s More
Although Tyson Foods remains well positioned to benefit from the solid global demand for protein, it has been grappling with elevated input costs across its segments, mainly due to raw material and labor cost inflation. In the third quarter of fiscal 2023, the company’s gross profit came in at $677 million, down from the $1,611 million reported in the prior-year quarter. It witnessed elevated input costs per pound. Most of this was primarily due to increased cattle costs, unfavorable derivative impacts and higher labor costs. The persistence of such trends is concerning.