An expansion in the number of U.S. hogs and cattle is contributing to the change in diets by boosting supplies of pork and beef. Restaurants are seizing on the increases to promote hamburgers instead of chicken, while grocery stores have featured pork.
The shift is hurting chicken producers, such as Tyson Foods Inc and Sanderson Farms Inc, said Bill Roenigk, an agricultural economist and consultant for the National Chicken Council trade group. He said the chicken sector would generally lose money or break even in the fourth quarter of 2018.
Tyson on Tuesday reported quarterly sales that missed Wall Street estimates, sending its shares lower even though the company posted an overall profit. Operating income from chicken fell nearly 34% from a year earlier, while beef operating income was up about 14%.
“The shift from chicken to beef and pork has been far more pronounced than anyone had imagined,” said Heather Jones, managing director for investment firm Vertical Group.
The pain for chicken producers and the increased appetite for pork are ripple effects of Trump’s trade disputes, which have also reduced shipments of U.S. soybeans and sorghum to China.
“With all that pork on the market,” Roenigk said, “it has spilled over to affecting consumers’ demand for chicken.”
Pork prices have fallen as retaliatory duties of 62% in China and up to 20% in Mexico have curtailed U.S. exports to those countries.
Kraft Heinz Co, which owns the Oscar Mayer brand, cut prices for bacon after pork belly prices declined. nL2N1XC22R]
Ahold Delhaize’s Food Lion and Stop & Shop grocery stores have offered deals and launched marketing campaigns for pork, said Jarrod Sutton, a vice president for the National Pork Board trade group.
Food Lion said it offers promotions based on product availability.
The US Department of Agriculture projects per capita chicken consumption will rise only about 1.2% next year, compared to gains of 4.3% for pork and 2.6% for beef.
Bacon burgers
Promotions at restaurants such as Wendy’s Co, which is featuring a “S’Awesome” hamburger with three strips of bacon, are helping fuel pork and beef demand, according to the National Cattlemen’s Beef Association, an industry group.
Wendy’s said it generally does not adjust marketing based on short-term changes in commodity prices.
Yet, quick-service restaurant chains released 54 new hamburgers through September this year, up about a third from last year, according to a survey of about 75 chains by Datassential, which analyzes menu trends. Releases of chicken products fell 14%, said Datassential, which also reported a decline in new pork dishes.
The slowdown in chicken consumption is a turnaround for meat companies. Tyson is building a $300 million plant to process 1.25 million more birds a week after struggling to keep up with chicken demand last year. In July, the company, which also sells beef and pork, cut its 2018 profit forecast, citing uncertainty in trade policies.
Tyson’s CEO, on a conference call on Tuesday to discuss quarterly results, said the company could benefit in 2019 if the foodservice industry more heavily promotes chicken.
Mexico slapped tariffs on imports of U.S. pork after Washington implemented duties on imports of aluminium and steel. Both sides maintain their tariffs despite a recent trade deal by the United States, Mexico and Canada.
Implementation of those trade agreements should help boost pork exports and push Americans back to chicken, said Bill Lovette, chief executive of Pilgrim’s Pride Corp. The chicken company, owned mostly by JBS SA, reported third-quarter net sales fell 3.4% to US$2.7 billion.
Sanderson Farms, the third-biggest US poultry producer, reports earnings in December.
Lower demand this month pushed prices for US chicken breasts to their lowest weekly average on record, according to an index from food-service company ArrowStream.
Chicken supplies in cold storage facilities reached a record at more than 959 million pounds (435 million kg) at the end of September, according to USDA data. Beef and pork supplies in cold storage were about 2% and 10% below records set in 2016 and 2015, respectively.
Refrigerated storage company Lineage Logistics said meat was backing up near major U.S. ports due to tariffs, and it projected that rising meat supplies would create a shortage of storage space.
Kerry Wilson, a Florida mom, is taking advantage of the increase in beef and pork supplies. She said she grew tired of chicken after preparing it up to four nights a week and finds pork has more flavour.
“I can’t gussy it up enough anymore,” she said of chicken. “It just seems to be the same taste.”