Tyson chicken nuggies are shaking… There’s a new poultry powerhouse on the scene. Cargill, whose wholesale food products end up in everything from baby formula to cat food, is the second-largest private company in the US (#flex). Now, it's partnering with Continental Grain to snatch up Sanderson Farms, the US’ third-largest poultry producer (#doubleflex). Sanderson shares jumped 7% on news of the $4.5B acquisition.
The coop is hot… Demand for chicken is soaring, and wing prices have nearly tripled from last year. In the meat aisle, Cargill is known for its big beef business 一 not chicken. Now, it's paying an 11% premium to add Sanderson’s poultry to its cart. The goal: catch up to spiking demand while it's hot.
- Fry it: Popeyes viral fried chicken sandwich has helped sales skyrocket since it launched in 2019. Since then, KFC, Wendy's, Burger King, McDonald's, and even Taco Bell have joined the lucrative Chicken Sandwich Wars.
- Deliver it: Dine-in chains like Applebee’s and Chili’s launched chicken wing delivery services to keep sales up during the pandemic.
- Love it: McD's crushed sales projections for its Crispy Chicken Sandwich last quarter, and says it's only at the beginning of its "multiyear chicken journey."
It’s expensive to be late… Chicken was trending years before Popeyes ever fried a sandwich. It surpassed beef as America’s most popular meat in 2012, and has kept its favorite fowl status since. Case-in-point: Chick-fil-A has earned more per restaurant than McDonald’s since 2018. Cargill missed the early chicken wagon. Instead of buying into the poultry trend low, it’s jumping in when prices are through the coop with a multi-billion dollar acquisition.