The Asian market for chicken meat and eggs is undergoing significant evolution, driven by rising incomes, and changing demographics and tastes, presenting opportunities and challenges for the region’s producers.
Speaking at WATT Global Media’s DuPont-sponsored Poultry Trends Asia Seminar, held in Bangkok in March, Surendra Bade, DuPont regional industry leader, noted that, while the outlook for the Asian broiler industry is positive, in the immediate term it is difficulties in the region’s swine industry that are stimulating growth.
Outbreaks of African swine fever are leading to higher demand for, and production of, chicken meat and, while the outbreaks have primarily occurred in China, their impact is being felt beyond China’s borders. Not only are China’s producers seeing an increase in demand for their product, but exporting countries, such as Thailand, are also responding by raising output.
Growth conditions
Short-term trends aside, Bade said that, in much of Asia, poultry meat consumption still remains below world averages, particularly in countries where population growth is high and, importantly, economic growth is strong, creating an environment for growing consumption. India, Indonesia and the Philippines, for example, are among those countries where growth is expected to be particularly strong due to rising incomes and generational change.
The growth in Asia’s younger consumers, open to new ideas and with different tastes and preferences to those of older generations, increasingly means poultry producers need to adopt new production practices and deliver different product to market.
Asia’s younger consumers want value for their money, but they also want convenience. They are concerned with issues such as animal welfare and sustainability in a way that older generations were not, and want food that is nutritious, safe and healthy.
Additionally, brands are important for younger consumers. While, for producers, there is the challenge of developing a brand that resonates with consumers, this comes with the opportunity of fostering loyalty and achieving higher margins and, while wet markets may be supplanted by retail, the fast pace of change means retail’s share is threatened by foodservice.
Challenge of inputs
Not all changes, however, are easy to accommodate and Asian producers, like those in the rest of the world, are facing pressure to minimize use of antibiotics.
China and Russia have already implemented bans on use of antibiotics as growth promoters, as have several Southeast Asian countries, including Indonesia, Thailand and Malaysia, while Vietnam is expected to follow suit soon. This is placing strains on the region’s nutritionists and veterinarians.
A further issue for producers in China is the cost of feed, with prices being pushed up as result of trade issues with the U.S. This is leading to producers looking for alternative ingredients and the greater use of byproducts in poultry rations.
Longer term, there will be an additional issue to contend with: the lack of natural resources. In developed countries, such as the U.S. and Canada, there are 6-10 acres of land per capita, whereas in Asia it is less than 1 acre. Fresh water too is an issue in the region. As consumer demand for meat rises, and consumer pressures increase, producing enough meat that aligns with expectations may become increasingly difficult.
Opportunities for eggs
Vincent Guyonnet, Ph.D., consultant to the poultry sector, reviewed the situation for eggs in Asia. Most of the growth conditions, such as growing urban populations and rising income levels, and challenges observed with poultry meat production, are also present in the egg sector.
In 2017, Asia represented 62% of the global egg production and accounted for 74% of global growth in output between 2007 and 2017. Many Asian countries have recorded double-digit growth during that period with some, such as Myanmar, Bangladesh and Uzbekistan, even recording triple-digit growth. The opportunities for the egg sector can be summarized in a half-dozen trends.
First, production will continue to grow, fueled by higher demand for quality animal proteins. It is anticipated that Asia will represent about 70% of global egg production within the next 20 years.
Egg consumption in Asia varies tremendously between countries. Some of the highest annual per capita consumption is in Japan (333 eggs), Malaysia (315) and China (306), while among the lowest are Indonesia (96), Bangladesh (94) and India (68). The trend for increased consumption of eggs is expected in most Asian countries, even where consumption is already quite high, such as in Japan, which is promoting the consumption of two eggs a day.
Changing tastes
While bulk sales of eggs still dominates in Asia, branded eggs and the marketing of nicely packaged products will increase, and create new business opportunities for the region’s producers. The functional egg segment – eggs enriched with specific nutrients – is growing rapidly in many countries, with omega 3 eggs as the preferred nutritionally enriched eggs
Consumer demand for high-quality and safe products is also driving the consolidation of egg production, with bigger farms able to better implement quality programs while realizing significant economies of scale in production and marketing costs. China is the best example, with several multi-million-hen farms established over the past few years. It is expected that a Chinese company will make it into the top 10 global egg-producing companies within the next five years.
By 2027, Generation Z and millennials will represent more than half of all consumers. The desire of younger generations for more authenticity and sustainability in the foods they consume will require the egg sector to increase its transparency in terms of farming practices and animal welfare. Consumers will also judge companies based on the choices they make in terms of packaging materials for eggs; recyclable and sustainable packaging will become key factors in food purchasing decisions.
While egg processing – liquid and powdered eggs – is well established in Japan, it is still an emerging sector in many Asian countries. Market conditions are ideal for growth of this sector, allowing Asian countries to produce more value-added products for local consumption and export.
Asia is anticipated to account for about 70% of global egg production within the next 20 years, according to Vincent Guyonnet. (Terrence O’Keefe)
