Media that empowers working people – that's how we build a More Perfect Union.

Don't Miss a Video!

Access our exclusive reporting and rapid response actions directly in your inbox, so you don’t miss a beat in the fight for working people nationwide.

Be a part of a community backing up independent journalism with action.

Ideas

Have a story to tell or idea to share?
Email stories@perfectunion.us
© 2021 More Perfect Union Action

Together we can build power for working people.

We’re asking questions that really matter, and telling the stories of people who really need to be seen and heard.

You can support our work by donating today.

Amount

Make It Monthly

Don't Miss a Video!

Access our exclusive reporting and rapid response actions directly in your inbox, so you don’t miss a beat in the fight for working people nationwide.

Be a part of a community backing up independent journalism with action.

There’s a Price Gouging Smoking Gun In Tyson’s Earnings Report

New evidence of America's biggest meat processor driving up inflation for its own profit.

By Eric Gardner

Company data from Tyson Foods indicates that the meat processing giant used its size and power to extract an additional $500 million from American consumers last quarter under the cover of inflation.

Both the Biden administration and a broad swath of economists have accused Tyson of using its dominant market power to dramatically inflate meat prices at the expense of consumers and ranchers. The company’s latest earnings report backs up these charges and gives an indication of how much revenue Tyson may be generating through price gouging.

In the second quarter of 2022, the Arkansas-based conglomerate estimated that it responded to roughly $1.5 billion in higher costs with almost $2 billion in corresponding price increases. That difference is potentially half a billion dollars paid directly out of consumers’ pockets.

Slide from Tyson Foods Q2 2022 earnings report

Tyson Foods’ quarter was one of the most profitable in recent memory. The company earned $1.2 billion on $13 billion worth of sales, while expanding its operating margin by 38% from the same quarter last year, generating more profit on every dollar of sales than it has in any second quarter in over a decade.

Critically, Tyson’s profits were delivered despite the company lacking significant brand power that’s typically associated with premium pricing. Companies like P&G, Coca-Cola and Clorox spend billions of dollars each year establishing premium brands in order to command higher prices from consumers. But according to Wall Street research firm Morningstar, approximately 80% of Tyson’s products lack significant brand equity and are considered “undifferentiated” or “commoditized.”

In a competitive market, Tyson would struggle to raise prices for largely undifferentiated products, let alone pass on inflation to consumers. Instead, it would need to absorb additional costs and keep prices low to risk a competitor gaining market share by undercutting them on price. 

However, what Tyson lacks in brand equity, it makes up for in raw market power. With $47 billion in annual revenue, Tyson Foods is the number one beef and chicken processor in America and one of four firms that dominate America’s meat processing industry

To put the company’s size in perspective, if Tyson was broken up into its individual operating units, the beef business ($18B) would rival grain giant General Mills ($17.6B) and the chicken business ($13.7B) would still be $2 billion larger than rival meat packer Hormel ($11.4B). The Prepared Foods group ($8.9B) would eclipse JM Smucker ($8.0B). Pork, the smallest American business unit ($6.3B), would equal spice monopolist McCormick ($6.3B). 

In modern America, retailers (supermarkets, for example) typically exert a high level of control over manufacturers. The consolidation of big retail chains enables retailers to demand lower prices during negotiations, often accounting for 20% of a manufacturer’s total revenue. 

But meat may be the exception. Research from the Food Marketing Institute shows that meat is the primary driver of consumer grocery store choice. Tyson’s massive size enables it to consistently pass supply chain costs on to retailers, who have few options. Retailers then ultimately pass the cost onto consumers – despite selling largely undifferentiated products. “We’re not asking them to pay for any inefficiency that we have,” Tyson’s CEO claimed at a recent industry conference. “We’re just asking you to pay for the inflation.” 

But Tyson’s earnings report suggests that’s false. In fact, Tyson wants consumers to pay for inflation plus up to $500 million more. And consumers don’t have much of a choice because Tyson has the market power.

“We’re really positioned in a place where, from an elasticity perspective, we’re going to capture the consumer,” CFO Stewart Glendinning told the same industry crowd, referring to the concept of a consumer’s willingness to pay higher prices. “It’s just a question of where in the portfolio they’re going to go.”

Related Stories

YouTube Thumbnail
Here’s The Real Reason Beef Prices Are Skyrocketing
Read More
YouTube Thumbnail
Inflation Explained: The Real Reason Prices Are Going Up
Read More

The Latest

Amazon Walmart
America’s Mega Chains Thrive Off Illegal Price Discounts. The FTC’s New Commissioner is Fed Up.
Read More
Herschel Walker
Herschel Walker Is the Only Senate Candidate Giving Paid Speeches for Lobbyists
Read More
YouTube Thumbnail
Trader Joe’s Closed Down a Wine Shop Days Before Workers Planned to Unionize 
Read More
Apple Oklahoma City
Apple Ramps Up Union-Busting Ahead of Latest Apple Store Union Election
Read More
Exxon
Exxon’s Latest Profit-Seeking Move: Selling Unlimited Oil Abroad Despite Shortages at Home
Read More
YouTube Thumbnail
JD Vance Claims He’s Taking on Elites. His Donor List Tells Another Story.
Read More
Howard Brown Health
Nurses at One of the Largest Queer Health Clinics in the Country Prepare to Strike
Read More
YouTube Thumbnail
Rochelle Garza May Unseat Texas’s Corrupt Attorney General
Read More
Portland Maine DSA
Maine’s Biggest City Will Vote On An Ambitious Economic Agenda In November
Read More
jetblue
Air Travel Turning Point? Biden Moves to Block Latest Airline Merger
Read More
YouTube Thumbnail
Election To Watch: Marie Gluesenkamp Perez On the Verge of Upsetting Pro-Trump Candidate
Read More
Ken Paxton
Texas AG Ken Paxton Takes Campaign Cash From Power Companies Responsible for Grid Failure
Read More
Trader Joes
Trader Joe’s Workers in Williamsburg Join Union Wave
Read More
jd vance
J.D. Vance Refuses To Side With Kroger Workers’ Fight For Higher Wages In Ohio
Read More
medical debt
After Student Debt, the Next Battle is Against Medical Debt
Read More
YouTube Thumbnail
President Biden Could Make Your Paycheck Bigger. Here’s How.
Read More
YouTube Thumbnail
How The Sacklers Got (And Stayed) Rich
Read More
Home Depot
Workers Plan to Renovate Home Depot With a Union
Read More
The Biggest Outside Spender On Election TV Ads Has A Dangerous Agenda — Kill Social Security And Medicare
Read More
YouTube Thumbnail
One Bill Could Help Farmworkers Unionize. Why Won’t Newsom Sign It?
Read More