February 20, 2008
The world's the market for US meat companies
US meat companies are taking notice of international markets as international sales volumes account for an increasingly larger chunk of overall sales, according to a report from Fitch Ratings called "US protein companies expand internationally".
International markets are increasingly important to top US meat companies such as Tyson Foods, Inc., Smithfield Foods, Inc. and Pilgrim's Pride Corp, thanks to the weak US dollar and rising consumption outside the US, according to Carla Norfleet Taylor, director of Fitch Ratings.
US companies exported US$9.1 billion worth of meat to international countries in 2007.
International sales at poultry giant Tyson, which accounts for a third of US meat exports, is up 25 percent since 2002.
Over that same period, pork giant Smithfield saw its international sales jump 350 percent to US$1.6 billion currently, accounting for about 14 percent of total sales for 2007.
Non-US markets now also account for about the same amount at top poultry producer Pilgrim's Pride, with international sales having doubled in the past five years to US$1.1 billion currently.
However, these companies are not content on just pushing meat to foreign countries; they are also acquiring or building foreign meat companies in order to drive sales, the Fitch report said.
A foreign asset provides asset diversification and offers direct exposure to international markets, the report noted.
Furthermore, these acquisitions also allow US meat companies to continue to have access to these markets when countries ban US products due to disease concerns, for example.
However, the downside is that these international companies would be more vulnerable from losses caused by fluctuating foreign exchange rates, the report said.
Still, this is unlikely to stop the tide of globalisation from US meat companies. US meat and poultry exports are expected to rise 5.1 percent to US$9.6 billion in 2008, according to the USDA.
