COVID-19: Poultry industry shifts to retail
Marel supports poultry processors to make production adaptations
The changing economic and market conditions brought by the coronavirus pandemic will have significant impacts on global poultry in 2020, according to Rabobank analyst Nan-Dirk Mulder. The poultry industry is already experiencing comprehensive shifts in local poultry production and international trade. Poultry processors will find Marel at their side to adapt to the new situation.
“The initial stockpiling stage that led to empty shelves seems to be behind us. Consumers have adapted to new shopping routines and added frozen and processed food stocks to their fridges and pantries. Poultry processors and retailers keep running and make more food available for consumers. On the production side, there are no signals of a major disruption in the production chain other than isolated cases,” says the Rabobank report. “We notice more at-home poultry consumption and higher sales of non-perishable poultry products. However, labor availability and logistics issues will likely affect supply in the coming months,” says Nan-Dirk Mulder.
Global poultry trade will face quite some volatility this year. The widespread closure of restaurants, schools, events and conferences has minimized food service activity, while retail stores are experiencing high demand as consumers stockpile non-perishable food for at-home dining. Coronavirus-related issues will keep causing shocks in supply and demand, driven by quarantine and logistics issues. Some poultry processing plants may even close down or cut down production due to country lockdowns, travel restrictions, quarantines or lack of business. Others are doing everything to keep their workers safe and guarantee production with increased cleaning, increased sanitation, employee screening for signs of illness, practicing social distancing and staggered breaks.
Poultry processors will find Marel at their side to adapt to the corona situation
Reallocation of products
As the industry tries to remain productive amid a pandemic, the transition from food service to retail is not as easy as it may seem. Companies throughout the food supply chain worry about this shift. Are there still any supply gaps in the retail channel that can be an opportunity to compensate – at least partially – revenue losses from foodservice? Is it really an opportunity? In the US, cancellation of popular sports events such as March Madness has led to a surplus of foodservice products such as chicken wings and tenders, normally consumed in large numbers during the events. Reallocation of products to the retail market is only partly successful. Every 10% drop in out-of-home food spending results in only an additional 3% in retail food spending, Rabobank estimates. In the US alone, normally 50% of poultry volume goes towards foodservice. Considering the growing number of people that have less money to spend as a result of the pandemic, poultry companies may cut back production of pricier, specialty and value-added products and concentrate on more affordable commodity items.
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