Tyson Pulls Back on Antibiotic-Free Beef After Its Profit Plunges

(Bloomberg) -- Tyson Foods Inc., one of the world’s largest meat suppliers, is downsizing its antibiotic-free beef offerings after backing away from chicken raised without antibiotics last year.

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In moves pointing to a broader shift, the company told a major customer late in 2023 that it wouldn’t be able to keep supplying it with beef raised without antibiotics, according to a person familiar with the decision who asked not to be named discussing private conversations. Tyson also said antibiotic-free beef from its Open Prairie Natural Meats brand would be limited starting in January, according to a document seen by Bloomberg.

About two decades ago, Tyson said it would produce some beef without antibiotics as consumer demand increased for food made more naturally. Antibiotics had been employed on farms both to prevent and treat disease and to promote growth. Foregoing them tends to be more expensive because the animals need more hygiene measures and space.

But concerns about overuse of antibiotics on farms, and connections to more resistant bacteria that are a threat to human health, led the US to ban some applications last decade. While Perdue Farms had already started removing antibiotics by that point, others followed by eliminating all of them from some chicken flocks. But Tyson has backtracked, saying last summer it would bring back ones not considered to pose a threat to humans.

Now Tyson is shrinking its options for beef raised without antibiotics, according to previously unreported changes to its product offerings. The company also ended a program to sell antibiotic-free beef with marketing group Certified Angus Beef after nearly two decades, the entity confirmed to Bloomberg. Since its founding more than 40 years ago, Certified Angus Beef has become one of the industry’s few well-known brands with its assurances on quality. Tyson still works with it in other parts of its business.

Company Response

Tyson didn’t directly respond to specific questions about changes to what it calls its no-antibiotics-ever program.

“Tyson Foods is dedicated to maintaining the health and welfare of the animals within our supply chain,” the company said in a statement. “We base our decisions on sound science and an evolving understanding of the best practices impacting our customers, consumers and the animals in our care. We continue to offer antibiotic-free beef based on market demand, and our commitment to antibiotic stewardship has not changed.”

The company is still selling some beef raised without antibiotics, including at Whole Foods, according to reporting from stores. The grocery chain, which is owned by Amazon.com Inc., didn’t respond to a request for comment.

Tyson, which generated more than $50 billion in sales during its last fiscal year, has a handful of brands for selling pork and beef to grocery stores and restaurants. Open Prairie, the company’s line for more natural options, described its stance on antibiotic-free meat as a “strict never ever” policy, according to marketing materials. But now the Open Prairie website no longer touts beef and instead only promotes pork.

The company also stopped using a DNA tracing technology for tracking Open Prairie beef through the supply chain, according to the document reviewed by Bloomberg. When announced in 2019, Tyson said it was a “key tool” for the brand and would help meet the “growing demand for more transparency about how food is produced.”

One potential reason for these changes is economics. The US beef herd is the smallest it’s been in seven decades, which has boosted prices for slaughter-weight cattle to record highs. Beef prices are rising, too, but not enough to offset the surge in cattle costs. And that’s hurting the industry’s results, including at Tyson where gross profit plunged last year.

Producing beef raised without antibiotics entails extra costs that might not be paying off for Tyson, from the ranches to the slaughterhouses, where the animal and the carcass needs to be separated and tracked throughout, said Lance Zimmerman, a senior animal protein analyst for Rabobank.

“Companies are under immense pressure,” Zimmerman said. To “stop the bleeding,” they are “looking at ways to navigate the marketplace, improve efficiencies at plants, deliver high quality products but in a way that makes sense."

$38 Billion

Meanwhile, as consumer visits to restaurants decline, sales of antibiotic-free beef at grocers are outperforming the overall US market, according to data from Circana, which tracks purchases at retailers. At stores, "no antibiotics ever" beef, represents just 6% of fresh beef sales, a small but growing piece of the nearly $38 billion market. Sales by volume for the category for the 52 weeks through May 19 are up more than 10%, compared to a 0.6% increase for all beef products. Sales for Certified Angus Beef's antibiotic-free offerings have "remained pretty constant," a spokesperson for the group said.

Tyson’s moves raise questions about the future role of antibiotics in the meat industry, following producers and restaurant companies announcing plans to move away from them about a decade ago.

After Tyson changed its policy on its no-antibiotics-ever chicken to allow antibiotics deemed not important to human health, Chick-fil-A made a similar shift.

Tyson has said resuming the use of some antibiotics in chicken paid off. Birds are putting on more weight and fewer are dying early from illness, Chief Executive Officer Donnie King said at a conference earlier this year.

Raising beef without antibiotics can be more difficult than chicken because cattle live longer before slaughter — up to several years compared to about six weeks for chickens — and that increases the chance of them being exposed to disease. Cows also move to different producers, making it more difficult to track whether they’ve been treated with antibiotics.

But some producers continue to raise cattle successfully, rarely having to resort to antibiotics. That approach could take longer, and require other changes, according to Steve Roach, safe and healthy food program director at Food Animal Concerns Trust, a nonprofit focused on animal welfare and food safety.

“There are challenges,” Roach said. “But they’re not insurmountable.”

--With assistance from Gerson Freitas Jr.

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