Perdue Farms Inc.

P.O. Box 1537
Salisbury, Maryland 21802
U.S.A.
(410) 543-3000
Fax: (410) 543-3212

Private Company
Incorporated: 1920
Employees: 12,500
Sales: $1.2 billion
SICs: 2015 Poultry Slaughtering & Processing; 2048 Prepared Feeds Nec; 2075 Soybean Oil Mills

“My chickens eat better than you do.” As one of the many snappy advertising slogans used by Perdue Farms since the late 1960s, this phrase helped Frank Perdue build his family poultry farm into a company that boasts annual sales of more than $1 billion. Perdue Farms is the fourth-largest producer of raw chicken in the United States, trailing only Tyson Foods subsidiary Holly Farms, Conagra Poultry, and Gold Kist.

When people think of Perdue Farms, the lean, creased features of longtime chief executive officer and advertising spokesman Frank Perdue usually come to mind. But the company was actually founded by Frank’s father, Arthur W. Perdue. In 1920 the elder Perdue bought five dollars worth of laying hens and went into business selling eggs in Salisbury, Maryland.

For its first two decades, the company remained a tiny, family-run organization, in large part because of Arthur Perdue’s unwillingness to borrow money to finance expansion. “He was a checkbook-balance man,” his son would later say of him, as quoted in Inc. magazine. “If he had money in the bank and didn’t owe any, it didn’t matter how much we lost. But if he owed money, it didn’t make any difference if we were making a million a week—we had to get that paid off before we expanded.”

In the meantime, Frank Perdue went off to college, entering Salisbury State College in 1937, but left after two years to rejoin the family business. He kept his own flock of chickens on the side and had 800 hens of his own by 1941. The company grew in automatic response to improved economic conditions, as the nation pulled out of the Great Depression of the 1930s and demand for eggs increased. The Perdues found, however, that maintaining their sole focus on eggs also limited their profit potential. During the 1940s, they shifted their emphasis away from egg production and began turning out broiling chickens for resale to processors. Among their early customers were industry giants Swift & Company and Armour. By 1952, when Frank Perdue succeeded his father as president of the company, Perdue Farms was racking up annual sales of $6 million on a volume of 2.6 million birds.

Even still, the younger Perdue felt constrained by his father’s conservative ways. Frank Perdue held a vision of turning the family business into a fully integrated breeding operation with its own hatcheries and feed mills. Finally, in 1961, the elder Perdue agreed to his son’s plan to finance a soybean mill by borrowing money—the first time in his 40 years in the poultry industry that he had willingly gone into debt. “When we finally borrowed money, I was 41 years old and he was 76,” Frank later recalled in Inc. “Knowing the nature of the individual, I have to be appalled in retrospect that he put his name to a $500,000 note.”

During the 1960s, Frank Perdue built up a tall stack of vertical integration for Perdue Farms. By 1967 the company could boast of one of the largest grain storage and poultry feed milling operations on the East Coast, soybean processing plants, mulch plants, a hatchery, and some 600 farmers raising birds under the Perdue name.

The engine that drove Perdue Farms’ rapid expansion during this time was, of course, Frank Perdue himself. And in later years, whether out of pride or simple desire to state the obvious truth, he would not hesitate to take credit for the company’s success. “I wanted the company to grow to the maximum extent possible,” he told an Inc. reporter in 1984. “I wouldn’t be satisfied with number two. I have driven very hard to increase production.” He also drove very hard to increase sales. During the early days of the company, he served his father as salesman, traveling up and down the Eastern Seaboard to meet with buyers. Once he became president, Frank Perdue continued attending supermarket openings to keep his company’s profile as high as possible. “My father wouldn’t do it,” he commented in Inc., “but I’ll do anything it takes for this business because I consider it more my baby than it was his. I was totally into it without any letup for 20 to 30 years. I’ve been the principal force in its growth.”

Indeed, by 1967 Perdue Farms was posting annual sales of more than $35 million. At about this time, however, the company faced a serious threat as processors began to buy chickens directly from farmers, cutting out middlemen like Perdue Farms. Processors were thus able to expand their profit margins and squeeze their outside suppliers by driving harder bargains with them. Perdue Farms responded to this challenge by becoming a processor itself, adding its own processing operations and delivering the processed birds to market on its own. The Perdue brand name made its debut in retail meat counters in 1968. The company chose New York City as its first target market because of the city’s high concentration of people with above-average incomes and its reputation for having consumers who are hard to impress; Perdue figured that if its chickens sold there, they would sell anywhere.

Frank Perdue had his doubts about whether or not this move into retailing would succeed, but he would soon find himself pleasantly surprised. For one thing, Perdue Farms held a significant advantage over its major competitors: it had easy access to the major urban markets of the Eastern Seaboard. Salisbury is a several-hour truck ride away from New York, Philadelphia, and Washington, D.C., and an overnight drive from Boston and Hartford. Secondly, the company’s redoubled efforts to produce high-quality chickens paid off. To ensure that he could grow birds that were more tender than the rest, Perdue hired two professors from North Carolina State University to write a computer program that would supervise the feeding of his chickens, establishing formulae that would keep the birds as healthy as possible at each stage of their growth.

Finally, and perhaps most importantly, advertising generated consumer awareness of the Perdue brand name beyond the company’s fondest expectations. In 1972 the company hired Scali McCabe Sloves, a small New York agency, to handle its advertising; in turn, the agency made perhaps the most fateful decision in the history of Perdue Farms—putting Franklin Parsons Perdue himself on the air. In print, on radio, and on television, the voice and visage of Frank Perdue became a known presence in the northeastern United States almost from the very start. Inc. described him as a most unlikely corporate spokesman—“slender, laconic, whiny-voiced, balding, droopy-lidded, long-nosed”—but Perdue’s earnest appeals based on the quality of his product proved to be effective. Business Week once wrote that he possessed “all the fervor and sincerity of a Southern preacher” in his television commercials.

Catchy slogans also helped; one print advertisement that ran in the early 1970s showed a stern visaged Perdue with his arms folded and standing beneath the words, “Everybody’s chickens are approved by the government. But my chickens are also approved by me.” In a lighter vein, another Perdue ad instructed housewives, “If your husband is a breast or leg man, ask for my chicken parts.” Perdue may have uttered the most immortal of all his slogans, however, when he informed his audience that “it takes a tough man to make a tender chicken.”

Perdue’s success as a frontman for his own company in major media markets during the 1970s and 1980s, in fact, inspired advertising agencies to make pitchmen out of other chief executive officers, including Eastern Airlines’ Frank Borman and Chrysler’s Lee lacocca. It also drew the attention of New York City Mayor Edward Koch, himself something of a Frank Perdue look-alike and no stranger to the value of publicity, who once called Perdue “an upper-echelon chicken guy.”

But this transformation of a Maryland chicken farmer into a media icon would have meant nothing if it had not inspired more people to buy Perdue chickens. Between 1972 and 1984, Perdue Farms’ sales doubled every two years. By the end of that period, the company was selling 260 million birds per year and generating revenues of more than $500 million. This success made Perdue Farms one of the 50 largest private companies in the United States.

Arthur Perdue died in 1977 at the age of 91. He had never really retired from the company that his son now ran; he retained the position of chairman and came to the office every day until the end of his life. Frank Perdue officially succeeded him as chairman in 1979.

While Perdue Farms was riding the increasing popularity of both its pitchman/chief executive officer and its chicken to success and fortune, the company did not by any means escape the notice of its competitors. Its main rival was North Carolina-based Holly Farms, which later became a subsidiary of Tyson Foods. Holly Farms was a much larger company than Perdue Farms and sold chicken to a nationwide market. Perdue Farms was its main competitor in the lucrative Northeast. As early as 1971, Holly Farms watched the Perdue experiment in selling at the retail level under its own brand name with great interest and concluded that Perdue Farms could be beaten—at least in part because Perdue Farms was pricing its broilers as high as ten cents per pound above other brands. That year, Holly Farms began selling under its own brand name.

The two companies competed neck and neck during the 1980s, introducing new products in an effort to spur sales growth and out-do the other. During the early eighties both were spending $6 million dollars a year for advertising. In 1983 Perdue Farms introduced chicken franks—hot dogs stuffed with chicken instead of pork or beef. In 1985 Holly Farms began selling fillets and bite-size nuggets—“all you do is dip ‘em and do ‘em,” went their slogan—under the name Time Trimmer. In response, Perdue Farms launched a line of prepared chicken products called Perdue Done It!, which included breaded and precooked nuggets and cutlets. As it turned out, neither Perdue nor Holly Farms could quite out-do the other, but both succeeded well enough so that in 1985 the two companies together accounted for one-fourth of all the fresh chicken sold in the United States.

Frank Perdue resigned as chief executive officer in 1988 but remained as his company’s chairman and advertising spokesman. He was 67 years old and, with 90 percent of Perdue Farms stock in his and his family’s hands, his personal fortune was estimated to be at least $350 million. Perdue was succeeded by one of his longtime executives, Donald Mabe, who lasted only three years in that office, retiring in 1991.

Also in 1991, Perdue retired as chairman, although he remained the company’s chief public relations asset. The ensuing vacuum at the top was partially filled by Perdue’s 41-year-old son James, who became chairman upon his father’s retirement. Perdue Farms’ board decided to leave the chief executive officer spot open, hoping that it would serve as an incentive for both the younger Perdue and his second-in-command, company president Pelham Lawrence.

Unlike his father, James Perdue did not start out in life as an enthusiastic poultry man. He worked only informally for the family business while he was growing up. After graduating from college, he entered the marine biology program at the University of Washington and graduated with his Ph.D. in 1983. But James Perdue’s departure from the family business was a matter of personal growth as much as it was an expression of differing interests. “The reason I left... was to find out more about myself, to get a better confidence level,” he related in the New York Times soon after becoming chairman of Perdue Farms. “Although I am Frank Perdue’s son, I wasn’t born with confidence. That can only come with victories.” By his own estimation, his graduate work gave James the self-assurance that he needed. Meanwhile, he kept abreast of company affairs through regular conversations with his father. As his graduate studies were coming to an end, Frank Perdue flew out to Seattle and asked James to come work for Perdue Farms.

Under James Perdue, Perdue Farms enacted subtle, but important changes in the way it produced chicken. The management process was opened up so that plant workers had more influence in decision-making. The company also sought to improve worker safety after the state of North Carolina fined it in 1989 for permitting unsafe working conditions at its four processing plants there. These changes in Perdue Farms’ operating procedures were begun by Frank Perdue before he retired, but the task of carrying them out was left mostly to his son. By his own admission, the outspoken elder Perdue was less temperamentally suited to the task of selling the company’s efforts to its own workers. “Jim’s style is different from mine,” he confessed in the New York Times. “He can sell the achievement of quality in a more palatable way. I am more demanding, he is more conciliatory.” Low-key by nature, James Perdue announced no plans to appear in television commercials.

Perdue Farms’ revenue growth began to level off in the late 1980s and early 1990s, but the poultry industry as a whole saw its 20-year sales boom come to an end at the same time. Chicken sales grew at a rate of four to five percent per year during the 1970s and 1980s, but in the early 1990s, per capita consumption of poultry declined while production continued to increase. For Perdue Farms, sales leveled off at $1.2 billion in 1991 and 1992.

Catchy slogans and appealing television commercials notwithstanding, it seems that how well Perdue Farms does is tied to the overall popularity of chicken with the American consumer. The continuing success of the company depends to a large extent on whether the taste of chicken and concerns over the relative healthfulness of poultry versus red meat can sustain growth in the industry as a whole. But it is certain that Perdue Farms has come down to its third generation of Perdues as a noteworthy success story, from which a significant portion of the American public learned that it takes a tough man to make a tender chicken.

Further Reading

“Perdue Chicken Spreads Its Wings,” Business Week, September 16, 1972; Mamis, Robert A., “Frank Perdue,” Inc., February 1984; Giges, Nancy, “Holly Farms, Perdue Face off in Chickie Run,” Advertising Age, September 16, 1985; Barmash, Isadore, “The Quieter Style of the New Generation at Perdue,” New York Times, July 16, 1992.

—Douglas Sun

Perdue Farms Inc.

P.O. Box 1537
Salisbury, Maryland 21802
U.S.A.
(410) 543-3000
Fax: (410) 543-3212
Web site: http://www.perdue.com

Private Company
Incorporated: 1920
Employees: 19,000
Sales: $2.1 billion (1996 est.)
SICs: 2015 Poultry Slaughtering & Processing; 2048 Prepared Feeds, Not Elsewhere Classified; 2075 Soybean Oil Mills

The leading poultry producer in the northeast United States and the second largest across the nation, Perdue Farms Inc. sells chicken and turkey products through retail venues and to food-service companies in the United States and in more than 30 countries worldwide. A vertically integrated business, Perdue processes grain and soybeans for feed, breeds and raises the poultry, processes the meat, and maintains a fleet of trucks for delivery of its products to market. Perdue Farms celebrated its 75th anniversary as a family-run business in 1995.

Modest Origins

When people think of Perdue Farms, the lean, creased features of longtime chief executive officer and advertising spokesman Frank Perdue usually come to mind. But the company was actually founded by Frank’s father, Arthur W. Perdue. In 1920 the elder Perdue bought five dollars worth of laying hens and went into business selling eggs in Salisbury, Maryland.

For its first two decades, the company remained a tiny, family-run organization, in large part because of Arthur Perdue’s unwillingness to borrow money to finance expansion. He was a “checkbook-balance man,” his son would later say of him, as quoted in Inc. magazine. “If he had money in the bank and didn’t owe any, it didn’t matter how much we lost. But if he owed money, it didn’t make any difference if we were making a million a week—we had to get that paid off before we expanded,” son Frank commented.

In the meantime, Frank Perdue went off to college, entering Salisbury State College in 1937, but left after two years to rejoin the family business. He kept his own flock of chickens on the side and had 800 hens of his own by 1941. The company grew in automatic response to improved economic conditions, as the nation pulled out of the Great Depression of the 1930s and demand for eggs increased. The Perdues found, however, that maintaining their sole focus on eggs also limited their profit potential. During the 1940s, they shifted their emphasis away from egg production and began turning out broiling chickens for resale to processors. Among their early customers were industry giants Swift & Company and Armour. By 1952, when Frank Perdue succeeded his father as president of the company, Perdue Farms was racking up annual sales of $6 million on a volume of 2.6 million birds.

Vertical Integration in the 1960s and 1970s

Still, the younger Perdue felt constrained by his father’s conservative ways. Frank Perdue held a vision of turning the family business into a fully integrated breeding operation with its own hatcheries and feed mills. Finally, in 1961, the elder Perdue agreed to his son’s plan to finance a soybean mill by borrowing money, marking the first time in his 40 years in the poultry industry that he had willingly gone into debt. “When we finally borrowed money, I was 41 years old and he was 76,” Frank later recalled in Inc., adding that “knowing the nature of the individual, I have to be appalled in retrospect that he put his name to a $500,000 note.”

During the 1960s, Frank Perdue built up a tall stack of vertical integration for Perdue Farms. By 1967 the company could boast of one of the largest grain storage and poultry feed milling operations on the East Coast, soybean processing plants, mulch plants, a hatchery, and some 600 farmers raising birds under the Perdue name.

The engine that drove Perdue Farms’ rapid expansion during this time was, of course, Frank Perdue himself. And in later years, whether out of pride or simple desire to state the obvious truth, he would not hesitate to take credit for the company’s success. “I wanted the company to grow to the maximum extent possible,” he told an Inc. reporter in 1984, noting “I wouldn’t be satisfied with number two. I have driven very hard to increase production.” He also drove very hard to increase sales. During the early days of the company, he served his father as salesman, traveling up and down the Eastern Seaboard to meet with buyers. Once he became president, Frank Perdue continued attending supermarket openings to keep his company’s profile as high as possible. “My father wouldn’t do it,” he commented in Inc., “but I’ll do anything it takes for this business because I consider it more my baby than it was his. I was totally into it without any letup for 20 to 30 years. I’ve been the principal force in its growth.”

Indeed, by 1967 Perdue Farms was posting annual sales of more than $35 million. At about this time, however, the company faced a serious threat as processors began to buy chickens directly from farmers, cutting out middlemen like Perdue Farms. Processors were thus able to expand their profit margins and squeeze their outside suppliers by driving harder bargains with them. Perdue Farms responded to this challenge by becoming a processor itself, adding its own processing operations and delivering the processed birds to market on its own. The Perdue brand name made its debut in retail meat counters in 1968. The company chose New York City as its first target market because of the city’s high concentration of people with above-average incomes and its reputation for having consumers who are hard to impress; Perdue figured that if its chickens sold there, they would sell anywhere.

Frank Perdue had his doubts about whether or not this move into retailing would succeed, but he would soon find himself pleasantly surprised. For one thing, Perdue Farms held a significant advantage over its major competitors in that it had easy access to the major urban markets of the Eastern Seaboard, since Salisbury was a several-hour truck ride away from New York, Philadelphia, and Washington, D.C., and an overnight drive from Boston and Hartford. Secondly, the company’s redoubled efforts to produce high-quality chickens paid off. To ensure that he could grow birds that were more tender than the rest, Perdue hired two professors from North Carolina State University to write a computer program that would supervise the feeding of his chickens, establishing formulae that would keep the birds as healthy as possible at each stage of their growth.

Advertising Increases Sales in the 1970s and 1980s

Finally, and perhaps most importantly, advertising generated consumer awareness of the Perdue brand name beyond the company’s fondest expectations. In 1972 the company hired Scali McCabe Sloves, a small New York agency, to handle its advertising; in turn, the agency made perhaps the most fateful decision in the history of Perdue Farms—putting Franklin Parsons Perdue himself on the air. In print, on radio, and on television, the voice and visage of Frank Perdue became a known presence in the northeastern United States almost from the very start. Inc. described him as a most unlikely corporate spokesman—“slender, laconic, whiny-voiced, balding, droopy-lidded, long-nosed”—but Perdue’s earnest appeals based on the quality of his product proved to be effective. Business Week once wrote that he possessed “all the fervor and sincerity of a Southern preacher” in his television commercials.

Catchy slogans also helped. One print advertisement that ran in the early 1970s showed a stern-visaged Perdue with his arms folded and standing beneath the words, “Everybody’s chickens are approved by the government. But my chickens are also approved by me.” In a lighter vein, another Perdue ad instructed housewives, “If your husband is a breast or leg man, ask for my chicken parts.” Perdue may have uttered the most immortal of all his slogans, however, when he informed his audience that it “takes a tough man to make a tender chicken.”

Perdue’s success as a frontman for his own company in major media markets during the 1970s and 1980s, in fact, inspired advertising agencies to make pitchmen out of other chief executive officers, including Eastern Airlines’ Frank Borman and Chrysler’s Lee iacocca. It also drew the attention of New York City Mayor Edward Koch, himself something of a Frank Perdue look-alike and no stranger to the value of publicity, who once called Perdue an “upper-echelon chicken guy.”

But this transformation of a Maryland chicken farmer into a media icon would have meant nothing if it had not inspired more people to buy Perdue chickens. Between 1972 and 1984, Perdue Farms’ sales doubled every two years. By the end of that period, the company was selling 260 million birds per year and generating revenues of more than $500 million. This success made Perdue Farms one of the 50 largest private companies in the United States.

Arthur Perdue died in 1977 at the age of 91. He had never really retired from the company that his son now ran; he retained the position of chairman and came to the office every day until the end of his life. Frank Perdue officially succeeded him as chairman in 1979.

Company Perspectives:

Our branded chicken and turkey products are sold in retail supermarkets, grocery stores, and quality butcher shops from Maine to Florida, and as far west as Chicago and St. Louis—a market area encompassing almost 40 percent of the nation’s population. Food service chicken and turkey products are sold nationwide, and Perdue’s international operations export to more than 30 countries around the world.

Competition with Holly Farms

While Perdue Farms was riding the increasing popularity, of both its pitchman/chief executive officer and its chicken, to success and fortune, the company did not by any means escape the notice of its competitors. Its main rival was North Carolina-based Holly Farms, which later became a subsidiary of Tyson Foods. Holly Farms was a much larger company than Perdue Farms and sold chicken to a nationwide market. Perdue Farms was its main competitor in the lucrative Northeast. As early as 1971, Holly Farms watched the Perdue experiment in selling at the retail level under its own brand name with great interest and concluded that Perdue Farms could be beaten—at least in part because Perdue Farms was pricing its broilers as high as ten cents per pound above other brands. That year, Holly Farms began selling under its own brand name.

The two companies competed neck and neck during the 1980s, introducing new products in an effort to spur sales growth and out-do the other. During the early 1980s both were spending $6 million dollars a year for advertising. In 1983 Perdue Farms introduced chicken franks—hot dogs stuffed with chicken instead of pork or beef. In 1985 Holly Farms began selling fillets and bite-size nuggets—“all you do is dip ’em and do ’em,” went their slogan—under the name “Time Trimmer.” In response, Perdue Farms launched a line of prepared chicken products called Perdue Done It!, which included breaded and precooked nuggets and cutlets. As it turned out, neither Perdue nor Holly Farms could quite outdo the other, but both succeeded well enough so that in 1985 the two companies together accounted for one-fourth of all the fresh chicken sold in the United States.

Frank Perdue resigned as chief executive officer in 1988 but remained as his company’s chairman and advertising spokesman. He was 67 years old, and, with 90 percent of Perdue Farms stock in his and his family’s hands, his personal fortune was estimated at around $350 million. Perdue was succeeded by one of his longtime executives, Donald Mabe, who stayed only three years in that office, retiring in 1991.

Third Generation Takes Over in 1990s

Also in 1991, Perdue retired as chairman, although he remained the company’s chief public relations asset. The ensuing vacuum at the top was partially filled by Perdue’s 41-year-old son James, who became chairman upon his father’s retirement. The Perdue Farms board of directors decided to leave the chief executive officer spot open, hoping that it would serve as an incentive for both the younger Perdue and his second-in-command, company president Pelham Lawrence.

Unlike his father, James Perdue did not start out in life as an enthusiastic poultry man. He worked only informally for the family business while he was growing up. After graduating from college, he entered the marine biology program at the University of Washington and graduated with a Ph.D. in 1983. James Perdue’s departure from the family business was a matter of personal growth as much as it was an expression of differing interests. “The reason I left … was to find out more about myself, to get a better confidence level,” he related in the New York Times soon after becoming chairman of Perdue Farms. “Although I am Frank Perdue’s son, I wasn’t born with confidence. That can only come with victories,” James observed. By his own estimation, his graduate work gave him the self-assurance that he needed. Meanwhile, he kept abreast of company affairs through regular conversations with his father. As his son’s graduate studies were coming to an end, Frank Perdue flew out to Seattle and asked James to come work for Perdue Farms.

Under James Perdue, Perdue Farms enacted subtle, yet important, changes in the way it produced chicken. The management process was opened up so that plant workers had more influence in decision-making. The company also sought to improve worker safety after the state of North Carolina fined the company in 1989 for permitting unsafe working conditions at its four processing plants there. These changes in Perdue Farms’ operating procedures were begun by Frank Perdue before he retired, but the task of carrying them out was left mostly to his son. By his own admission, the outspoken elder Perdue was less temperamentally suited to the task of selling the company’s efforts to its own workers. “Jim’s style is different from mine,” he confessed in the New York Times. “He can sell the achievement of quality in a more palatable way. I am more demanding, he is more conciliatory,” Frank observed. Low-key by nature, James Perdue announced no plans to appear in television commercials.

Perdue Farms’ revenue growth began to level off in the late 1980s and early 1990s, as the poultry industry as a whole saw its 20-year sales boom come to an end. Chicken sales grew at a rate of four to five percent per year during the 1970s and 1980s, but in the early 1990s, per capita consumption of poultry declined while production continued to increase. For Perdue Farms, sales fell to $1 billion in 1991, but recovered in 1992 to $1.2 billion.

By 1994 Jim Perdue had been persuaded to follow in his father’s footsteps and become a spokesman for the company. A series of advertisements featured Jim and Frank Perdue together, using the same folksy, humorous style as previous Frank Perdue ads. The first television commercial of the series began with Frank telling the audience that he had bad news for competitors: “It’s a little project I’ve been working on for the past 45 years—the result of decades of intensive development.” After pausing dramatically, Frank announced, “Meet my son, Jim. He may be even tougher than I am.” Having taken the role of spokesman reluctantly, Jim Perdue told Nation’s Business in 1995 that he would judge the wisdom of the move by concrete results: “If chicken sales continue or improve, then obviously it was good. If they don’t, then it was not. Time will tell,” he noted.

Aggressive Expansion in the Mid- to Late 1990s

Faced with three years of almost level sales in the early 1990s, Jim Perdue implemented a five-year plan that called for a 15 percent growth rate a year. The company pursued this ambitious goal by expanding its markets both domestically and internationally, with a continuing emphasis on vertical integration. At the time, growth was the only way to survive the intense industry consolidation. In 1960, there were 360 poultry processors in the United States; by 1985, that number had dropped to 125. By 1997, approximately 50 processors remained, with no end to the consolidation in sight, according to analysts.

Through aggressive expansion in the mid-1990s, Perdue met its goal. The company moved into markets in the South and Midwest and built or acquired local granaries, hatcheries, and processing plants to cut down on transportation costs. In 1992 the company opened a new processing plant in Dillon, South Carolina. The following year, the company added a feedmill, a hatchery, an egg warehouse, and a grain storage silo. Perdue also acquired Shiloh Grain and the grain trading assets of Fred Webb, Inc. In 1994 the company began construction of a broiler/roaster complex in Kentucky and expanded its sales into Florida. The Kentucky complex was intended to support expansion into Michigan, Kentucky, and Missouri markets, which Perdue entered in 1996.

International expansion was also an important part of the company’s five-year plan. In 1995 Perdue acquired Showell Farms, boosting Perdue’s international sales to ten percent of total sales in 1996. The company expanded into Japan in 1996 by recruiting food wholesaler Toshoku Ltd. to sell its precooked chickens. International tastes provided Perdue with complementary markets. Chicken feet, which Perdue once sold to livestock feed producers, were now exported to China, where they were considered a delicacy and commanded top dollar. Moreover, one of the company’s largest new markets, Russia, preferred dark meat, as opposed to U.S. markets, which preferred white meat.

Although Perdue’s aggressive expansion succeeded in doubling the company’s revenues within five years, earnings did not follow suit. The company reported a loss in 1996; in fact, many poultry processors suffered that year, and with profit margins of only one or two cents per pound of its chicken, Perdue saw even that disappear when the Midwest experienced very small harvests and grain prices rose. Management remained optimistic, however, expecting the company to enjoy a profit in 1997. As for surviving the continuing consolidation in the industry, Perdue Farms stood in a good position to thrive: poultry sales were rising throughout the United States and internationally; Perdue boasted prime locations for its processing facilities; and the company’s vertical integration helped it control costs.

Further Reading

Barmash, Isadora, “The Quieter Style of the New Generation at Perdue,” New York Times, July 16, 1992.

Giges, Nancy, “Holly Farms, Perdue Face off in Chickie Run,” Advertising Age, September 16, 1985.

Nelton, Sharon, “Crowing Over Leadership Succession.” Nation’s Business, May 1995, p. 52.

“Perdue Chicken Spreads its Wings,” Business Week, September 16, 1972.

Shelsby, Ted, “No Business for Chickens,” The Sun, May 18, 1997, p. E1.

—Douglas Sun
—updated by Susan Windisch Brown

Perdue Farms Inc.

31149 Old Ocean City Rd.
Salisbury, Maryland 21801
USA
Telephone: (410) 543-3000
Fax: (410) 543-3292
Web site: www.perdue.com

NOW ARRIVING CAMPAIGN

OVERVIEW

For many years chicken has been a staple of the American dinner table. And one of the leading companies to produce and market poultry has been Perdue Farms Inc. of Salisbury, Maryland. The beak-like visage of its chairman and chief spokesman, Frank Perdue, had come to symbolize freshness and quality in the minds of many poultry consumers. In the 1990s, however, increased public awareness of food safety—spurred on by highly publicized outbreaks of food poisoning—threatened to erode the image of Perdue chickens as wholesome, healthful foods. Changes in federal food safety regulations enacted in 1996 were only part of the solution to this problem. Perdue took the health scare as an opportunity to reinforce the core image of its brand as one of "golden yellow" freshness. A series of print and television ads hammered home this message in whimsical, then alarmist fashion.

The television commercial "Now Arriving" was crafted in May 1997 by Perdue's longtime agency Lowe & Partners/SMS. It shows company president Jim Perdue—Frank's son and new company spokesman—being greeted in an airport by a Hare Krishna who offers him a marigold. Marigolds being an integral part of a chicken's diet, Perdue harangues the mendicant at length about the healthy feed regimen of Perdue's poultry.

Then in August 1997 Perdue took out full-page ads in major newspapers questioning the safety of its competitors' poultry products. "Warning! Before You Buy Another Chicken, Read This!" announced the banner headlines on the ads, which touted the chicken giant's policy of requiring its birds to "pass 65 quality inspections, 22 more than the government's so-called Grade A standards." The attention-grabbing print ads were designed by R. C. Auletta & Company and signed by Jim Perdue. This and the Hare Krishna ad both addressed a specific market problem—the food safety concern. They also attempted to build brand value in a manner consistent with two decades of Perdue advertising. Most industry observers rated them a success on both fronts.

HISTORICAL CONTEXT

In the late 1990s Perdue Farms was the second-largest poultry producer in the United States. Its branded chicken and turkey products were sold in retail supermarkets, grocery stores, and butcher shops in a market area comprising almost 40 percent of the nation's population. Perdue's food service chicken and turkey products were sold nationwide, and the company's products were exported to more than 30 countries. Sales for all operations exceeded $2 billion annually.

Founded as a table-egg poultry farm in Salisbury, Maryland, by Arthur W. Perdue in 1920, Perdue did not hire a second associate until 1930. In 1939 Arthur Perdue's 19-year-old son, Frank, joined the company as its third employee. In 1950 Frank assumed control of the company. Incorporated in 1953, the company began the process of vertically integrating its operations by constructing hatcheries, feed mills, and storage facilities. By the late 1960s this process was complete. Perdue Farms now had complete quality control of its poultry products.

In 1968 the Perdue brand was born as the company entered the highly competitive New York City broiler market. A limited radio ad campaign was launched, emphasizing the quality of the Perdue brand of broilers. That same year Frank Perdue assumed the role of lead company spokesman. Three years later Perdue Farms embarked on its first national advertising campaign, commissioning the fledgling New York ad agency of Scaly, McCabe, and Solves. Relying on the tag line "It Takes a Tough Man to Make a Tender Chicken," the print and television ads played off Frank Perdue's owlish persona. Scaly, McCabe, and Solves would oversee the Perdue account for the next 15 years.

The following year Perdue ads introduced another of the signature themes that would come to define the brand. In commercials that debuted in the Philadelphia, Providence, and Boston markets, the company compared its own fresh chickens to competitors' frozen birds in order to emphasize Perdue's trademark "yellow" freshness. A decade later the freshness and healthfulness was still front and center in the minds of company marketers. In 1983 Perdue became the first poultry processor to provide nutritional labels on its products. That same year Jim Perdue, son of Frank, joined the family business as a management trainee in quality control at the Salisbury plant.

In its pursuit of quality control Perdue initiated the Quality Improvement Process in 1985. An official Quality Process was also adopted at that time. Responding to the needs of health-conscious consumers, Perdue's feed researchers in 1986 implemented a new diet that substantially reduced fat in chickens. And a 1990 television commercial had Frank Perdue driving a nail into a birdhouse with a competitor's frozen chicken to highlight Perdue's freshness.

In 1991 Jim Perdue took over from his father. He was named chairman of the board of Perdue Farms, with Frank Perdue designated chairman of the board's executive committee. In one of his first moves, Jim Perdue green-lighted the launch of the "Fit 'n' Easy" line of skinless, boneless chicken and turkey products. Additional nutrition initiatives included expanded nutritional labels and a series of "Guides to Nutrition" for consumers. And when a drive to enhance safety capabilities was spurred by outbreaks of E. coli and salmonella in various parts of the United States, Perdue Farms capped its efforts in this arena with the establishment of a new microbiology laboratory in 1993.

The mid-1990s proved to be a period of important changes at Perdue. In 1993 ad agency Scaly, McCabe, and Solves merged with The Lowe Group to form Lowe & Partners/SMS. A concerned Frank Perdue expressed reservations about such a large agency paying sufficient attention to his account. After assurances from Lowe & Partners/SMS executives, the poultry scion agreed to stick with the reconfigured ad house.

In 1994 Perdue did some reconfiguring of its own. The poultry giant acquired Howell Farms, purveyors of the Cooking' Good chicken brand, as well as a processing plant in Milford, Delaware. Perdue Farms was now the second-largest poultry farm in the United States. That same year Jim Perdue made his commercial debut in a series of local television spots with his father Frank. The "Third Generation" spots eased the transition for Perdue to take over the role of company spokesman.

In the late 1990s Perdue's television spots continued to emphasize freshness and food safety. A 1996 spot showed Jim Perdue scolding one of his chickens for eating pizza instead of Perdue's own premium feed. These advertising initiatives were backed up by a highly publicized food safety information campaign. In 1996 Perdue began to implement the HACCP (Hazard Analysis Critical Control Point) program. The company also introduced a free educational booklet for consumers, "Perdue Guide to Safe Handling of Chicken and Turkey Products," and invited members of the press on food safety tours.

TARGET MARKET

"I think about germs," Terri Savage of Oklahoma City told USA Today in 1997. "I'm very aware of them. There are all kinds of little buggies you can get that get misdiagnosed as flu and what you've got is food poisoning." Savage was part of a growing number of American consumers who worried as much about food safety as good taste when they cooked. With the increased incidence of food poisoning in the 1990s, this group became a market that Perdue Farms wanted to sell itself to.

Accordingly the poultry giant's 1997 ads addressed the American consumer's legitimate fears about food safety. Polls showed that more than 65 percent of American consumers had some trepidation over food safety, with chicken one of the major areas of concern. Poultry sold in supermarkets is safe to eat if properly handled once it departs the production facility. But the birds must be thoroughly cooked, and any surface or utensil that comes in contact with the uncooked poultry should be washed with soap and hot water. With the overwhelming balance of its business in chicken, Perdue looked to reassure these customers about the freshness and safety of its products.

COMPETITION

The year 1996 was one of record growth for Perdue Farms. The company's acquisition of Howell Farms in January was the second-largest merger in poultry industry history, and the purchase of ConAgra's Milford, Delaware, processing plant vaulted the company to number two in the poultry sector behind Tyson Foods. The two industry leaders had always competed on chicken quality. But the food safety concerns of the mid-1990s gave Perdue a unique opportunity to exploit its advantage on freshness. Emphasizing this point of difference between the two brands was given further impetus due to a series of health scandals that bedeviled Tyson in 1997.

Just days before July 4th—one of the biggest barbecuing days of the year—U.S. Department of Agriculture inspectors found severe problems with chicken heading to consumers from the Tyson slaughtering and processing plant in Cumming, Georgia. Some birds had black machine grease on them, according to reports filed by inspectors. Others had infections under their skin or had been stored in temperatures favorable for bacterial growth. In what one Tyson employee contended was "an act of God," chickens spewed from a machine onto a broken conveyor belt too quickly for workers to handle, and birds were falling onto the floor and piling up. The birds that fell into the plant's drain water were destroyed. The others were reportedly cleaned up and sold. Inspectors classified those deficiencies as "critical," meaning the meat heading to the market was contaminated and, if eaten, would be certain to harm the consumer. The previous year Tyson Foods had accumulated 311 "critical" citations at its Cumming plant, which processes about 1.3 million birds a week.

MARKETING STRATEGY

The "Now Arriving" television ad, in concert with the surrounding print campaign, was what industry analysts considered the rarest of advertising creatures: a brand value spot that also addressed a specific market concern in an effort to build sales. The ads emphasized the traditional Perdue brand themes of freshness and nutrition while countering a growing public perception that commercial chickens may pose a health hazard. In an era when many creative shops seemed to opt for the offbeat and surprising in order to grab the attention of the public, the long-term, big picture thinking implicit in a brand value strategy sometimes got short shrift. As a result companies saw growth in short-term sales without adding any long-term value to their brand.

LIKE FATHER LIKE SON

Perdue Farms marked a milestone in 1994 when chairman Frank Perdue introduced his successor as chief company spokesman—his son Jim. In the initial television spot Frank described Jim as "a little project I've been working on for the past 45 years."

It was not the first time that two generations had crossed paths in the world of advertising. Bespectacled popcorn patriarch Orville Redenbacher began appearing in commercials with his grandson shortly before his death in 1995. And Frank Perdue himself once appeared in a print ad with his own father, company founder Arthur Perdue. But there are always risks when the baton is passed from a successful spokesperson to an unknown quantity.

Initially reluctant to try to replace his father, Jim Perdue was swayed by company research showing that consumers liked the idea of knowing who is behind a product. "It turned out it was very important," said the younger Perdue. "It's certainly the heritage of our company. And it's something that the consumer's having a harder time finding today. So that's why we decided to go ahead and try it."

In making the switch from father to son, Perdue's ad partners wisely decided not to try to transplant Frank's personality. "Jim is a little bit softer than Frank," said Sam Scaly, deputy chairman of Lowe & Partners/SMS. "He's not as hard-nosed." So out went the tag line "It Takes a Tough Man to Make a Tender Chicken." And in came the Hare Krishna's. The torch had most assuredly been passed.

Novel or dramatic approaches in advertising often can be effective, but usually only if there is some element that reminds consumers what the brand is and what it represents. Often this is a long-term process in which a brand message is hammered into public consciousness repeatedly until the market gets the message. Marketing professors often explain this approach to students by asking them to explain their brand in a single word or phrase. In this way American consumers have come to understand that the Nike brand translates into athletic achievement, BMW is "the ultimate driving machine," and, in this case, Perdue stands for freshness and safety. If the ultimate goal is to get the customers to call up this word or phrase when asked what a brand represents, the first goal is get everyone in the marketing department to agree on this proposition. Unfortunately many creative shops never even bother to ask the question; consequently, a sense of continuity from one campaign to the next may be lost, and that which made the brand famous to begin with is the first casualty.

Every brand has a history—a personality profile in a sense. All brands also possess certain practical advantages that can be used as selling points to the consumer. But most analysts agree that advertising, if it is to be effective in the long as well as the short term, must do more than just lay out the product's pros and cons. A whimsical or offbeat ad is fine as long as its message is drawn from the brand's core identity in order to build the value of the brand.

Brand identity carries with it all sorts of benefits, attributes, and emotional associations. The brand's identity in the final analysis is what sets it apart from all other brands in its category; often called the sustainable point of difference, it is the one thing that customers seem to desire most. Companies that have isolated this "one thing"—in Perdue's case, freshness—and stick to it in their ads usually enjoy a long and healthy life. They can then use whatever gewgaws their creative agencies come up with to attract consumer attention and address specific market concerns, like food safety.

Perdue's print ad, which ran in newspapers in every major city east of the Mississippi, was designed to address consumer concerns (some apparently fostered by other poultry companies) that commercial chickens such as Perdue's were not safe. The testimonial, signed by Jim Perdue, read in part: "Every chicken we sell is raised on a strict, all-natural diet, full of things like corn, soybeans, and marigolds. And no hormones. Our fresh birds have always been fresh, never frozen." The ad failed to mention the fact that many supermarkets froze Perdue chickens once they arrived at the store, but this was tangential to the purpose of the ad, which was to reassure the public that Perdue meat was fresh.

In the television spot entitled "Now Arriving," the same message is relayed in a more humorous manner. Genial Jim Perdue—clearly helped by his physical resemblance to his father—reminds viewers of the healthiness of his poultry products by detailing their macrobiotic diet to an airport Hare Krishna. The fact that the Hindu mendicant flees Perdue and his accordion of chicken snapshots only reinforces the notion that Perdue is almost obsessive about the health of his chickens. The birds' golden yellow color is mentioned three times as a visual cue for consumers who will associate yellow Perdue packaging with healthiness and nutrition the next time they go shopping.

OUTCOME

Perdue's print and television ads of 1997 retained two essential elements from previous Perdue advertising: the use of the company spokesman and the emphasis on freshness, specifically the all-natural diet. In this way the ads remained consistent with the brand identity already established through years of successful advertising. "Perdue is fresh," the ads essentially said, and, concomitant with that, "Perdue is run by a nice man who would not allow you to eat anything that was not good for you." At the same time, however, the ads reacted to a specific consumer concern that threatened to affect chicken sales. In this rare case building long-term brand value and addressing short-term sales concerns went hand in hand.

FURTHER READING

Cavetto, Neil. "Retired Perdue Farms Chairman." The Cavuto Business Report, June 19, 1998.

Manning, Anita. "Cooking Up Ways to Safeguard against Food Poisoning." USA Today, March 31, 1997.

Moore, Martha T. "New Perdue Onstage—Son Jim Rules Roost and Takes the Spotlight." USA Today, April 27, 1994, p. 4.

Nelton, Sharon. "Crowing Over Leadership Succession." Nation's Business, May 1, 1995, p. 52.

Yee, Laura. "Perdue Playing Off Fears of Consumers." The Cleveland Plain Dealer, August 13, 1997.

                                         Robert Schnakenberg