Retailers wanting a sneak preview of the future for supermarket poultry should look to the food-service industry. So said poultry's top marketers, in a round of interviews with SN.
They also said retailer-supplier partnerships will be the key to getting these products into America's shopping carts and winning back consumer dollars from the burgeoning food-service and restaurant sector.
None of the executives from the country's four biggest poultry suppliers -- Tyson Foods, Springdale, Ark.; Gold Kist, Atlanta; ConAgra Poultry Co., El Dorado, Ark., and Perdue Farms, Salisbury, Md. -- said they anticipate
a significant slowdown in consumption.
However, they do foresee tougher competition coming for the meat department, as successful food courts and food-service operators fight for a bigger share of poultry sales.
They also indicated that there are opportunities for retailers and suppliers to work together to exploit the retail chicken market to its full potential.
Among the trends of note, value-added products and modified atmosphere packaging will loom large in chicken's future, while natural, free-range or organic will remain niche products, the suppliers agreed.
In addition, consumer concerns will be supplier concerns, they said, not only with regard to demands for convenient, innovative products, but also when it comes to product safety.
What follow are highlights from interviews with Jeff Sandore, vice president of retail and consumer marketing at Tyson; Joe Finch, vice president of marketing at ConAgra Poultry; Jim Perdue, chairman of Perdue Farms, and Gregg Moore, director of marketing for poultry at Gold Kist.
(This feature will run in two parts. Part two will appear in SN's next issue, Oct. 2.)
SN: Consumption of chicken has been on the rise for a while now. Do you have any predictions as to what will happen in the next few years?
SANDORE: I think you're going to see poultry consumption continue to increase. Naturally, it's not going to go through what it did in the late 1970s and early 1980s, where you saw double-digit growth.
I believe what they're projecting now is around the 4% to 5% range for poultry consumption.
I think you're going to continue to see an increase for a few reasons: Consumers are going to continue to look for new ways [to prepare it], the health that is associated with chicken [and] chicken is versatile. Chicken lends itself to any type of sauce, any type of flavoring, and you can do just about anything with it.
FINCH: We believe total chicken consumption will continue to increase, but not evenly across all segments -- for example, retail, traypack, deli and food service.
MOORE: I think that consumption is going to continue to increase from the 5% [increase] that it was last year and stay close to that this coming year, declining down to just a little bit ahead of population growth over the next five years. By 2000 I don't think we're going to be in the 5% range.
So I would say we're going to have good consumption growth. It's going to be better than most other protein sources, and I think we will continue to keep pace with the population.
SN: How would you characterize the competition chicken is likely to face in the next few years from other protein sources, such as beef, especially now that prices have come down?
PERDUE: The short-term is that there's an oversupply and beef is cheap, but what can happen is there can be liquidation where supply is short, and prices go up. That's the nature of business. It's cyclical and obviously we're heading toward an oversupply, depressed-price market.
I think in the long run, poultry has and has always had [advantages] -- the amount of time it takes to get our meat from egg to market is an advantage.
Pork to me is more of a threat [than beef] because they're making a lot of improvements on their efficiencies and the cost of their product; and both pork and beef [industries] are trying to move toward case-ready, which is important to the retailer.
I think we've been always trying to catch up, and we're kind of neck and neck right now. We know that they're out there, along with other things -- pasta is a competitor.
We're looking at share of stomach -- it's not a matter of [only] meat. We have a lot of competition out there. But I think that the advantages -- the value, the convenience, the nutrition -- are all things that continue to help the industry to sustain itself and grow.
MOORE: I think chicken is going to still be a strong performer, relative to beef and pork. I think we'll have a higher percentage gain than they will have. [Those industries are] so large they may have large actual gains, too, but I think that our percentage increase in terms of consumer consumption is going to be higher per capita than beef and pork, and it's going to continue to grow relative to beef and pork.
FINCH: We believe that chicken/poultry will continue to gain market share vs. other meats and seafood. The competition with low-priced beef and pork will be especially intense not only for the consumer's dollars, but for a share of each retailer's feature advertising space. The best way for chicken to compete in the next few years is to creatively exploit its nutritional superiority, versatility, broad taste appeal and value.
SN: Can you pinpoint some specific consumer demands that the industry will be addressing, and how it will address them?
PERDUE: The ways you communicate with consumers are changing: for example, we just implemented an 800-number to get comments and that has expanded our networking capability. And that's given us a lot more insight into how we're doing and things that we have to fix.
We've always had a tremendous commitment to listening to our consumers and our customers, basically making sure that we're fixing the things that aren't right and doing the things that they think we should be doing.
I think the demographics show that there continue to be more single households [and more households where] two people are working, so the demand for convenience is continuing.
And so [there will be] more prepared products, more easy-to-fix convenient products. I think somewhere in the mid-80% range is [the number of] homes with microwaves, and people are buying more microwavable food+and that includes kids. Kids are cooks today with the microwave.
So kind of staying ahead of that curve is a big part of what we're trying to do. We just came out with this Short Cuts product, which is a fully cooked, boneless breast in four flavors. You can just cut open the package and put it right on the salad or fajitas or whatever. In other words, it's immediate . . . you can eat it right away. It's fresh and refrigerated, it will be in the fresh meat case, but in the cooked section, like we have the Perdue Done-it cooked products.
SANDORE: We need to continue to explore ways of further processing chicken the way consumers want it. Also, finding new forms, new preparation methods and offering those, and any shape or form that [consumers] want chicken to come in -- that is what it's coming down to.
Secondarily, [we need to be] providing chicken not just in a cooked state, but offering chicken wings to chicken pies to chicken meals to chicken kits -- and trying to figure out and develop areas where consumers are looking for further processed products with chicken in them.
MOORE: I really think the consumer wants to find easy, quick meal solutions and we haven't probably given her enough of those through the grocery trade. Whereas the deli might be emphasizing a particular item at a price, I think the consumer really wants us to be emphasizing a quick meal at a price.
Especially with delis, I think that's where a lot of work is going to get done to bring quick and easy meals to the consumer as opposed to individual servings of individual products.
PERDUE: The consumer wants lower-fat products and that's why I think ground turkey, for example, is growing, and skinless chicken is again a convenience for the consumer.
More convenience, changing the form of the product -- those are certainly going to be areas the consumer is interested in.
I think food safety is a big issue with the consumer out there and that we as an industry are moving quickly toward a [Hazard Analysis Critical Control Point] operation, and good management practices are going to be the only way to run your business.
FINCH: Food safety may be the pre-eminent consumer demand today and for the foreseeable future. ConAgra Poultry Co. is addressing the issue in our plants with process innovations to reduce or eliminate microbiological contamination. Furthermore, we have recently introduced the new Clysar/Delp package in our traypack line to preserve shelf life and to improve product appearance.
Issues discussed next week in Part II of this feature will include the significance of value-added items, natural/free-range/organic chicken, and production/processing trends.