In the context of a growing global market, Nan-Dirk Mulder comments that, even in more or less saturated markets such as the EU, consumption per capita is still growing strongly. In countries like the US, Israel and Australia, per capita consumption is above 40 kg. Average consumption in the EU is, however, only 23 kg. He expects market growth of 1.3% per year till 2022.
A gradual shift
“In Europe, however, there will be a gradual shift, which has already started. Concept chicken production now makes up 8% of total EU production. When looking at individual countries, 40% of Dutch production is slower growing. This figure is 24% in France and 11% in the UK. We are moving towards a new EU equilibrium where slow-growing chicken will be gaining traction in Northwest Europe and volume growth in standard chicken production will shift to Central and Eastern Europe,” says Nan-Dirk Mulder.
According to the Rabobank expert, the industry in Northwest Europe is producing too much low-priced bulk meat, at least from a strategic perspective. “There is a lot of power-play going on in the value chain and farmers are at the center of the squeeze.” It is a changing society increasingly concerned about topics such as animal welfare, the environment, health and production methods, that is offering opportunities for change. For the industry it’s a matter of following the change, but there’s a need for internal change as well. The days are gone when poultry production could be kept behind closed doors. Openness, active communication and a proactive attitude in the debate on animal welfare are needed.”
‘Premiumization’, the conscious choice for (exclusive) quality instead of quantity, can be a solution. Slow-growing concept broiler meat can become a premium product. Its production is, however, more expensive. The increase in cost price of producing meat from slow-growing breeds amounts to at least 20% for initial improvements such as a longer 48 day growth period and lower stocking density. This can go as high as 115% for organic production with free range access, organic feed and organic production parameters. Rabobank’s Nan-Dirk Mulder says, “Even with rising production costs, there are ways to capture more value. The journey to higher margins starts with offering a premium chicken and continues with value added chicken, value added food and unique brands.”
Plenty of opportunities
Developing new products, even convenience products, from upgraded instead of plain meat is one way to go. Producing meat, while taking on board social concerns such as antibiotic usage and animal welfare, is another option. Nan-Dirk Mulder says, ‘’we have to bear in mind that alternative, plant based proteins will become more competitive as well. If, however, we look at the general trend in consumption towards premiumization in products such as beers and coffee, there are plenty of opportunities for poultry meat, especially if the poultry industry moves to offering more premium products instead of just interchangeable and unidentifiable pieces of protein.”
Back in 2015, concept broilers were only produced for gourmet consumers, who wanted a special culinary experience. Concept chicken were also sold in markets, where animal well-being was important and proactive retailers created space in the market for premium chicken meat. Since then broiler concepts have really taken off. Today almost every major supermarket chain offers segmentation in their private labels, ranging from value to mid-range and from premium to niche. There is definitely more choice than ‘just’ chicken meat. The same premiumization can be seen in food service companies.
The market for premium chicken differs by country and welfare scheme. There are well established markets in France, the Netherlands and the UK. Countries such as Denmark, Norway, Belgium, Austria and Germany are also developing fast.
Nan-Dirk Mulder is Rabobank’s senior animal protein analyst and covers the industry from an international perspective. Since joining Rabobank, he has built up an in-depth knowledge on key strategic issues in the animal protein sectors. Nan-Dirk has advised and participated in projects on all five continents.