The supermarket poultry business is aiming more directly than ever at consumers' needs, and value-added products are leading the way.
That's how poultry's top marketers painted the future, in a round of interviews with SN.
Executives from the country's four biggest poultry suppliers said consumer-oriented trends such as pre-cooked birds, boneless, skinless parts and other value-added products will loom large -- and they mark a distinct step beyond the concerns about production and distribution that largely carried the business to its present position.
Technology advancements, including category management, will propel some consumer-marketing trends and quell others, they said.
In part one of this feature, which ran in last week's SN, the poultry marketers discussed how increasing competition from other segments of the meat market is sharpening the poultry industry's focus on the consumer.
In part two, the executives -- Jeff Sandore, vice president of retail and consumer marketing for Tyson Foods, Springdale, Ark.; Joe Finch, vice president, marketing, ConAgra Poultry Co., El Dorado, Ark.; chairman Jim Perdue of Perdue Farms, Salisbury, Md.; and Gregg Moore, director of marketing for poultry, GoldKist, Atlanta -- predict how that will impact the poultry product mix in the case.
SN: What portion of the business in supermarkets is value-added? What developments do you think we'll see happening over the next few years?
FINCH: I cannot quantify the portion of the supermarket business that is value-added. We do anticipate continued value-added new-product introductions in [individually quick frozen], deli and frozen.
SANDORE: Fresh chicken is never going to go away, [but] I think the big area where you're going to see growth to the year 2000 is IQF chicken. I'd almost call it the fresh chicken of the 1990s. It's already cooked for you; it's whatever way you want it: bone-in, boneless, boneless/skinless. It provides you a very versatile product.
The majority of people that buy fresh chicken in the supermarket take it home and it ends up in the freezer. And guess what you have now? One big block of frozen chicken.
The challenge with poultry producers is to find ways to continue to further process and find various ways to provide chicken that [are] not currently offered.
I think what you're going to see is more fully cooked meat that's refrigerated -- we do it right now with Tyson roasted chicken. It's a fully cooked product in a modified atmosphere packaging.
We have an 80% repeat on [that product]. If you can get it into the consumer's mouth, it's unbelievable.
The technology is there; we've got it right now. Perdue does it. I just question how far the consumer is in understanding it, the value that's associated with it coming [from] a manufacturer vs. being able to buy a fully cooked product out of the deli.
I think there's an education process -- that the product you buy out of the deli, [you've] got to take home and eat that day. The product that you're buying out of the fresh meat case [is] still good for another 10 days. We sell over 30 million pounds of this product per year, so there is a consumer demand out there, but I don't think we've capitalized on that to its fullest.
MOORE: Projections would say somewhere around 28% to 35% of all chickens are going to be value-added by the year 2000. With boneless/skinless, for example, we have seen a couple of competitors introduce marinated products, and I think this is an area that is going to eventually pick up and take off.
Back in 1970 about 70% of the industry was sold as whole birds; 25% was cut up and [the rest] was further processed. We're projecting that by the year 2000, it will be down to about 8% of the volume sold as whole birds, 54% will be cut up and 38% will be further processed.
I think you're going to find more flavor profiles, more spicy seasonings being added to the raw product, and then beyond that I think the whole area of further processed, fully cooked items is going to continue to grow.
I still think we're developing new ways to use chicken and consume it, and as a result of that I think we're going to see a continuation of the trend, with still more chicken on everybody's main meal plate more often, as well as more food-service chains having more chicken items on the menu.
In that area in particular I think we've been way behind beef and pork and that's where I really think a big portion of growth's coming.
PERDUE: [Value-added] is a sustaining and growing business, and even the supermarkets are doing it more and more themselves, buying meat and then having sections in their meat case where they are adding value and convenience -- for example, rubbing spices and marinades and that sort of thing and competing with the fast-food business.
Deli/rotisserie chickens are a growing business, very strong, so they're competing directly with the food-service business.
[Boston Market] is a competitor of supermarkets, obviously. And I think supermarkets have done a good job of trying to offer more value-added products.
SANDORE: Grocery trends start on the food-service side. Since we are one of the largest suppliers of poultry to restaurant chains, we've got to continue to capitalize on some of the trends that we're seeing happening [there] and try to figure out which ones are transferable to the retail side.
As retail marketers, we need to do a better job of staying in tune to changing trends in the fast-food or restaurant area. And supermarkets have to be concerned about people buying food away from the supermarket.
There are good alternatives out there, and the supermarkets have to figure out ways to stop us from going to the fast-food outlets to pick up our meals. We've got to do a better job working with retailers on alternatives that are just as easy to prepare at home.
I think you're going to see partnerships. You're seeing this whole category management explosion right now, [and] I think you're going to see it continue to flourish.
We've educated the restaurants. We're selling products and new ideas to them. We need to be doing the same thing with our retailers.
MOORE: [Operators] like Boston Market have definitely had an influence here and are going to continue to help the business. I think there's a lot of truth in some points raised at the latest National Broiler Council marketing seminar: that we just haven't taken and menu-ed the whole meal concept to the consumer in the retail trade, whether it's in the deli or merchandising related items in the fresh meat case and dry goods areas.
I really think we've lost the merchandising idea in the fresh meat and poultry area, where we're not willing to put up extra recipes, menu ideas.
We're going to be looking at both our fried chicken and rotisserie chicken in this coming year to help push whole meal sales, as opposed to piece item sales. I think it makes more sense for the consumer's needs today.
SN: How important is natural, free-range or organic chicken to consumers?
MOORE: Gold Kist was the first in the industry to really make sure that the consumer understands that a brand is an all-natural chicken with no hormones in it. We believe there's a need to understand the quality of chicken [they're eating].
The second part of that, though, is [that in] the organic and free-range area, I don't think the consumer's really willing to pay the price -- and our retailers [tell] us that the price of chicken is too high right now.
PERDUE: Truly organic and truly free-range is a niche; not everybody's going to pay what it costs to produce these kinds of products.
And honestly, the track record of these companies is not that great, and I think the consumer's got to be very careful about labeling, too.
SN: Are there any production or processing trends that are likely to change the way you do business with supermarkets in the next few years?
FINCH: From a processor perspective, you can expect to see an accelerated drive for production automation to take costs out, to offset the considerable price pressures in the market. There will be a heightened pursuit of new technology to support cost reduction, to develop/introduce new products, and to ensure food safety. I believe the long-term viability of fresh traypack chicken may hinge on the industry's ability to alleviate fears about food safety.