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Poultry, egg industry responds to consumer-driven challenges

Changes come with risk but also reward.

Every business has its challenges and business 101 tells us that we need to identify challenges, establish the risk, calculate the rewards and determine if we’re going to meet the challenges, Sam Lenarz, account manager at Agri Stats Inc., told attendees at the 2017 Live Production, Welfare & Biosecurity Seminar held this week in Nashville, Tenn. That’s one of the things the poultry and egg industry has done over time, he added.

“We’ve seen the challenges from the animal activists groups, and we’ve responded to that,” he said.

Whether it’s antibiotic-free (ABF) or no antibiotics ever (NAE) production, slow growth, transparent labeling, legal issues, animal welfare, etc., Lenarz said these are all consumer-driven challenges, and the question has become, “How do we respond to them?”

The industry has responded, he noted.

“We’ve got consumer activist groups that are pressuring our customers, so we’ve had to adjust to satisfy our customers,” he said. “It’s been amazing, in my time in the industry, to watch how we’ve responded and how quickly we can turn on a dime and get that customer what they want.”

According to Lenarz, the poultry and egg businesses are a customer-driven business model: “We respond to what the consumer wants and needs — and we are evolving.”

As the chicken has evolved, so has the poultry business, he added.

Specific to meat, Lenarz pointed out that the result of being a customer-driven industry is that chicken consumption has surpassed pork and beef consumption.

Now, however, there is a new challenge: More meat will be produced.

“What’s going to happen to that meat? We’re hoping that all of that is consumed, or we may see some different results on the bottom line,” he said.

Another challenged is that consumers want things quickly -- like now. In fact, Lenarz calls it a “microwave society.”

“We want it hot and now, but our industry has responded to that mentality,” Lenarz said, adding that one of the ways the broiler industry has responded is through further processing.

Almost 11% of chicken meat goes through a further-processing facility. “Our business has flourished by listening to the consumers,” he explained.

Regarding the ABF movement, Lenarz said it is “alive and well.” However, while human health was originally the whole reason for the movement, Lenarz said it is really just about the money for a group of investors in the business; “it’s all about the shareholder value.”

Because of this, he said the industry has changed. “We’ve met the challenge,” he pointed out.

Currently, 40% of all birds for meat are fed without antibiotics, and this is not in just one bird class; it’s in all weight classes, which Lenarz said is interesting.

Lenarz also discussed clean labeling, pointing out that 71% of Millennials are concerned about artificial ingredients.

“Poultry companies, in my opinion, have confused consumers,” he said, adding that consumers need to be educated about labels because the industry’s definitions vary.

For example, Lenarz said he talked to a consumer who said she bought a certain brand of chicken because it had a label, while a different brand didn’t have a label.

He told attendees that putting certain labels on a product makes consumers assume that the other products that don’t carry that label are bad.

“We confuse the consumer. Consumers want a clean label. They want to know what’s in their chicken, what’s in their turkey, where that egg came from and what’s in that egg. We’ve got to be able to respond to that. We’ve got to clear up the confusing labels,” he emphasized.

Specific to ABF, Lenarz said the industry needs to have an standard that is “uniform, universal and understandable.”

Overall, Lenarz said being customer focus comes at a price, but it also comes with a reward.

The risk has been the increased live cost and plant costs that come with change, “but the reward side is that we’re going to see improved markets and improved bottom lines,” he said.

Lenarz explained that sale prices are up, profits are stable thanks to many factors, meat prices are stable, consumer demand has increased and markets have done extremely well.

“The broiler industry has had a really good three to four years,” Lenarz concluded, adding that the industry needs to plan, because the next consumer-driven challenge is around the corner, “and it’s going to come in various ways.”

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