Chicken Holds Its Own

Chicken Holds Its Own

The chicken category gets a leg up on the competition

Despite volatile feed prices driving up the cost of production, chicken has kept its share of shoppers.

The category raked in $8.3 billion in the 52 weeks ending Sept. 29 — 5.9% more dollar sales and 1.4% more volume sales than the same period last year, according to the Nielsen Perishables Group.

In fact, chicken may be cannibalizing sales from other, more expensive proteins.

Piggly Wiggly Carolina Director of Meat Operations Freddie Sullens said he’s seen consumers shifting to chicken over pork and beef for two reasons:

“One is price and the other is, of course, more and more people are choosing chicken because of the healthier attributes.”

As reported last month, the Nielsen Perishables Group has observed customers turning to chicken.

“The one thing that we’ve been watching over the last six months with ground beef specifically is this switching directly going to chicken breast, and we do think because of the prices in the beef category, chicken breast does seem to be gaining some of that ground in terms of the increases from consumers,” said Sherry Frey, vice president of account services at the Nielsen Perishables Group.

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This shift to chicken may be an ongoing trend, according to Jack Gridley, director of meat and seafood at Dorothy Lane Market.

“I think you’re probably seeing more and more people going to chicken because it’s a cheaper protein than even ground meat and that’s one of the things that was emphasized at the American Meat Institute show, that chicken is going to be the new ground beef,” Gridley said in an earlier interview.

Wholesale price increases have been less for chicken than for other proteins, according to Sullens.

“We really expect that to continue … from what I’ve looked at, we expect that [the price of the] beef and pork category is going to go up a lot more than the chicken category in the coming months,” he said.

Donato Metta, meat/seafood/produce director at Food Circus Super Markets, hasn’t really noticed a big change in chicken wholesale prices recently.

“It’s been steady, for a while,” he said.

Protein Prices Rise

In 2011, retail prices went up 4.5% across the chicken category, according to the Nielsen Perishables Group.

And, the chicken industry expects wholesale chicken prices will likely continue to rise in 2013.

“We haven’t been able to pass on all the costs of feed. There are still some production adjustments going on. We’ll see more of those production adjustments take effect next year,” said Bill Roenigk, senior vice president, staff economist and market analyst, National Chicken Council.

“But as we see those adjustments take place there’s likely to be a reaction in the price in terms of prices continuing to move higher and that’ll be true not just for chicken but for the competing meats, also.”

Read more: Fresh Food Prices Low Now, Set to Rise in 2013 [5]

Roenigk said supermarkets might benefit from lower demand for chicken from foodservice, a very big market for the protein, over the last two to three years.

“And so if you’re a chicken company and you can’t sell as much chicken to foodservice/restaurants/fast food/whatever as you’d like, then your alternatives are either the supermarket or exports. And exports are running about 5%, 6% ahead over a year ago, so exports are doing well, but it’s pretty much a dark meat market for exports — the leg quarters.”

Dark meat, though, has made a comeback with U.S. consumers, too.

“We’ve got a great demand for boneless breasts here in South Carolina. However, the dark meat — the drumsticks and thighs — are right there with it. We’ve got a real diverse mix. Actually, the thigh cut of the chicken has gained a lot of popularity in the past year or so,” said Piggly Wiggly’s Sullens.

At the Foodtown stores in New Jersey operated by Food Circus Super Market, dark meat sells, but not nearly as much as the boneless breast, which is often offered on special for $1.99.

“The boneless breasts, still the No. 1 item. It beats everything. Beef, everything,” Metta said.

Across the category, chicken breasts contributed 55.3% of chicken dollar sales last year, with a 2.8% volume increase, the Nielsen Perishables Group found.

Trendy Cuts

Ground chicken is one cut that has potential to gain more traction with shoppers. Although ground chicken only had 1.3% of total fresh chicken dollar sales last year, the category is up 41.9% in volume from the year before.

“I see it growing because it’s such a great item. ... It’s got a great flavor; people like it after they try it much better than the turkey products. I really see that category growing, and we look forward to promoting it and having it grow here,” said Piggly Wiggly Carolina’s Sullens.

Precooked chicken sausages — a convenience item that usually comes with a high retail price — are a big mover for Foodtown stores, Metta said.

In addition to looking at different cuts, consumers are paying more attention to how chickens are raised.

Melissa Abbott, senior director of culinary insights at the Hartman Group, said that consumers are asking questions like: “What kind of life did the chicken have? How was it raised? Was it free roaming? Was it free range? Did it have a healthy diet? What kind of food did it get to eat?”

Read more: Consumers Want Guidance on Organics Says Hartman Group [6]

As for future trends, Abbott expects the breed of chicken to be more important to consumers going forward. Restaurants and butchers are already distinguishing between pig breeds, and supermarkets are promoting heritage turkey breeds for Thanksgiving, she pointed out (see “Specialty Turkeys Gain Shelf Space” [7]).

Some West Coast chefs are starting to use the Jidori chicken breed, known for its flavor, in more dishes, Abbott said.

Another trend, thanks to the influence of global cuisine and climbing protein prices, is just less meat on the plate.

“What we’re seeing is that, more and more, meat is becoming a condiment than that center-of-the-plate style eating, which has been prevalent in the United States,” Abbott said.

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