One of the largest impacts on poultry in 2022 has been the continued increase in demand, which of course saw a big rise in March of 2020 at the outskirts of the pandemic.
“With the lingering impacts of COVID-19, we continue to see consumers enjoying cooking at home, and the affordability and versatility of chicken creates an opportunity for the growth we are experiencing in retail,” said Bill Creighton, vice president of retail sales for Springdale, Ark.-based Tyson Foods. “From a trend perspective, we have seen the premium segment of our business grow faster than the rest of the market.”
However, given record-high inflation, the company expects consumers and foodservice operators to shift to products delivering comfort and value.
“Chicken, as an affordable, versatile, and healthy option, is well-positioned for continued growth in this environment,” Creighton said. “Both tray pack fresh poultry and fully cooked, including chicken nuggets, strips, etc., have continued to see strong demand coming out of the pandemic. As consumers look for alternative protein options, chicken has been an economical choice over the past year as consumers continue to want convenient at-home options.”
Chicken has grown to be a $13.7 billion category at retail and it’s still very strong relative to other proteins, according to the latest data from IRI. And even though in the last year, dollar growth flattened by .5%, chicken sales are up 14% compared to 2019.
“Chicken wasn’t all that different from the other protein manufacturers during the pandemic,” said Chris DuBois, senior vice president of protein practice leader for IRI. “Basically, manufacturers had to deal with so many production issues and overwhelming demand. Over the last 26 4-week periods, meals made at home have averaged between 77-83% and we believe it will remain elevated.”
IRI data also shows that while production issues and supply chain issues hampered everyone, volume basically remains elevated for meat compared to 2019. Consumers have learned to cook, and their meat purchase routines have changed.
“In general, most Americans are buying a broader assortment of meat cuts than they did prior to the pandemic,” DuBois said. “Cooking skills are improving and comfort with different cuts and proteins has increased.”
In response to some notable trends happening in the marketplace, Tyson Foods has moved all of its Tyson-branded retail production to No Antibiotics Ever and now offers Smart Chicken products with attributes including Air Chilled and Organic.
“Across new products and innovations, the Tyson brand has launched on-trend products across both fresh and fully cooked including our Tyson Slow Cooker and Instant Pot Meal Kits and Tyson Air Fried chicken nuggets, strips, and bites,” Creighton said.
To help fill the demands experienced by its customers, Tyson Foods is investing in additional capacity including a new, $425 million fresh chicken plant in Humboldt, Tenn., and a new, $300 million fully cooked plant in Danville, Va. The company has also invested aggressively in deboning and labeling automation to help get more nutritious protein on the plates for consumers even more quickly.
Chicken breast is still the biggest seller at 58% of total chicken sales but wings and boneless thighs continue to steal the show, IRI data shows.
“Wings are up again almost 14% to $1.4 billion, and that’s just in food retail,” DuBois said. “They are also up in foodservice. Every year, I wonder if we’ve seen the top in wings and every year there’s phenomenal growth. This might be one of the all-time great growth stories in any supermarket category and it’s a tribute to great marketing and product.”
Boneless thighs have also had strong growth and while they are a little smaller than wings in size, boneless thighs have become a must-have category in almost every supermarket.
The rise of dark meat has been a huge multiyear trend. The American chicken industry was built on boneless, skinless chicken breast and dark meat was largely an afterthought. For the last 3-4 years, dark meat has been growing much faster than white meat and it might be one of the most important changes across the meat case, DuBois said.
“While chicken has been relatively flat overall, if a producer is selling organic or NAE chickens, then they likely had a great growth last year,” DuBois said. “These two feed types are leading relative growth in chicken.”
Kathryn Tuttle, CMO of Farmer Focus, noted consumers are cutting back on restaurant spending because of inflation. Due to this, they are looking for easy-to-make, restaurant inspired creations at the store. Farmer Focus’ pre-seasoned line, which hit shelves earlier this year, was designed with this in mind.
“Farmer Focus’ pre-seasoned line gives consumers the ability to recreate their favorite meals at home or make it easy for them to explore new taste profiles,” she said. “Farmer Focus’ chef-inspired flavors include Rich Red Curry, Toasted Lager, Zesty Peruvian Lime, Chophouse Seasoned and Lemon Pepper. We’ve seen the trend that when consumers are cutting back on restaurant spending, they’re more than willing to pay the premium for these pre-seasoned items at grocery stores.”
It’s becoming as important as ever to communicate how a chicken product is packaged as consumers increasingly make more conscious choices.
“We have seen a continued focus on sustainability and using packaging materials that are designed to be recycled and made of renewable resources,” Creighton said. “Our Tyson brand continues to focus on building consumer awareness of our sustainability initiatives and our packaging design process prioritizes increasing the use of recyclable and renewable materials, as well as minimizing packaging where possible.”
Tuttle noted there is a lack of trust from some consumers for the current food system and they’re demanding more clarity on the humane treatment of animals, sustainability, farmer equity, and the production process in general.
“Over the past two years, Farmer Focus has seen nearly double-digit growth year-over-year in the number of individuals tracing their chicken back to the farm using the Farm ID on the package,” she said. “We expect the demand for social responsibility and transparency beyond seals on packages to grow over the next few years, despite inflation.”
The question during the pandemic and following was not if consumers were looking for chicken, the question was—and remains—how companies can meet the challenge to produce enough chicken to support the demand.
“From labor challenges to a shift in preference from eating out to at-home dining, consumers are eating more poultry than ever in all forms, fresh, frozen or fully cooked,” Creighton said.
Historically, brands holding niche positions in their category are substituted less during times of inflation and recession than those that hold the middle ground.
“At Farmer Focus, we don’t expect that to be any different as we face this inflation scenario,” Tuttle said. “Antibiotic Free and Private Label Organic shoppers are much more likely to trade down their purchases which in turn lowers grocer’s margins. Consumers who are committed to a brand’s values are much more likely to continue purchasing. Farmer Focus consumers are purchasing promises beyond just an organic seal, so the added value is obvious even when faced with rising prices.”