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Chicken winning the consumption battle, but at what price?

by James Nason, 12 June 2018
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Meat consumption by volume 1962 to 2015. The red line is chicken, the blue line is beef. Highlighting the extent to which consumption patterns are tied to a price point, the big spike in beef consumption occurred during the 1970’s when cattle prices dropped by half and consumers enjoyed historically low beef prices.

 

THE comparatively low retail price of chicken has been a key driver of the rise and rise of chicken meat consumption relative to other meats including beef in recent decades.

At $5 per kilogram chicken enjoys substantially greater cost competitiveness than beef at $30 per kilogram.

But one challenge facing the chicken sector has been its apparent inability to get consumers to pay more for chicken meat at retail.

While chicken meat consumption has overtaken beef consumption in volume terms, beef is still the dominant meat consumed in Australia in overall value terms.

This is because consumers have been willing to pay a higher average retail price for beef over time.

ACC CEO David Foote addressing the Poultry Information Exchange and Australian Milling Conference at the Gold Coast. Image: Pete Bedwell, Primary Media

In an address to the Australian Milling Conference and Poultry Information Exchange at the Gold Coast last week, beef processor David Foote, CEO of Australian Country Choice, pointed out that while Australians are eating more chicken, the average price consumers pay at retail for chicken has not risen above $5/kg in 16 years.

The sector’s growth in volume sales has been achieved by reducing costs through more productive genetics and operational efficiencies.

“Your market share has been gained on the back of cost, and that is fine if you make a buck doing it, but at the moment, the consumer appears to be not willing to pay any more for your efforts or reward you,” Mr Foote told the conference.

While the average retail price of chicken has flat lined, the average retail price paid for beef, lamb and pork for beef has grown:

Mr Foote said beef was still recognised at consumer level as a healthy product with high iron content, and people still craved a delicious juicy steak, and were willing to pay more over time for that eating experience.

“We sell more because we sell it for more,” Mr Foote said.

“Just think about it, it tastes delicious, it is a common theme, it is an easy theme, we don’t have to prosecute it: if you sit down and just say ‘mmm juicy steak, nah juicy breast fillet of chicken’, I haven’t heard that one.

“I know which one makes my mouth water and I am not that biased.

“It has certainly been an advantage in getting consumers to pay more.”

Mr Foote said Australian beef was now benefitting from more than $100 million worth of investment in meat science over the past 20 years to give consumers an assured high eating quality beef experience through the Meat Standards Australia program.

“I’m sure even if we canvass around this room, 10 years ago there was a 50 percent chance you would have a crap piece of steak at your favourite restaurant,” he said.

“Now it seems to be the degree of excellence you discuss, not the fact you had a bad one.

“That is because the industry has spent $100 million to develop this eating quality assurance scheme based on objective measurement, not subjective measurement.”

While chicken, pork, beef and lamb continued to fight for market share, Mr Foote noted that turkey and salmon were the new proteins looming on the market and looking to gain shelf-space.

He said fake meat posed a threat but he suspected that as the public learns that lab-grown meat is “actually grown in stem cells that have been taken as a biopsy from a live animal”, they might not get so excited about its naturalness.

The impact of rising feed costs

Rising feed grain costs due to expanding drought meant the grain required to finish an animal to domestic market weights now cost $201, compared to $134 last year.

“You don’t have to be Einstein to work out it is actually not good out there in cattle feeding at the moment,” he said.



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Reader's Comments


Comment
  • David Hill June 13, 2018

    Whilst it is hard to disagree with the majority of the points made in this article, I would like to question the statement “at $5 per kilogram chicken enjoys substantially greater cost competitiveness than beef at $30 per kilogram”, my question would be what is the price comparison between the competing products at the level the consumer is purchasing at, for example the comparative cost of mince and sausages.
    Is the beef retail industry doing enough to offer the consumer options for cuts that can deliver a similar meal outcome at a price that is more competitive? For example Flat Irons are nothing new, back when beef was the most consumed protein not everyone was eating loin cuts.
    Is it possible that the beef industry needs to follow the example of the chicken industry in regards to the statement “the sectors growth in volume sales has been achieved by reducing costs through more productive genetics and operational efficiencies”, mentioning productive genetics and operational efficiencies is always a good way to start a robust discussion at a beef production level.
    The other topic mentioned in the article that I find of most interest is the reference to MSA, this is another way to start a robust discussion at a beef production level. It is my understanding that those who where first involved with developing MSA where tasked with addressing the slide in beef consumption, inconsistency at a consumer level was an area to be addressed, selling cuts as meal options based on a cooking method innopropriate to the cut was another. MSA has delivered arguable the best eating quality science in the world, have we as an industry maximised the opportunities that MSA could potentially deliver is another question that continues to create differing opinions.
    We are way past the time when this industry has to come together and decide at what level and where we want to compete in the protein space.

    David Hill
    Northern Independent Director
    Cattle Council of Australia.

    Thanks for your comment, David. The only retail price for chicken we could find around $5/kg on the Woolworths shop online catalogue this week was bone-in items including legs, at $3.50/kg and whole roasting chicken on special at $4.50/kg. Breast fillet was on special at $9/kg and skinless thighs, $10.50/kg. Editor.

  • Natasha Wing June 13, 2018

    Woolworth’s Thigh Fillet $10/kg

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