COVID-19: Poultry shifts production from foodservice to retail

With more consumers staying home because of COVID-19, poultry producers are pivoting resources and supplies to meet the shifting demand from foodservice to retail.

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(Picsfive | Dreamstime.com)
(Picsfive | Dreamstime.com)

With more consumers staying home because of COVID-19, poultry producers are pivoting resources and supplies to meet the shifting demand from foodservice to retail.

The widespread closure of restaurant dining rooms, schools and conferences has shrunk foodservice activity, while retail stores are experiencing high demand as consumers stockpile food for at-home dining.

Companies throughout the food supply chain worry about this dramatic shift because a 10% drop in out-of-home food spending results in only an additional 3% in retail food spending, Rabobank estimates. The National Chicken Council (NCC) estimates that approximately 50% of chicken volume in the U.S. goes towards foodservice.

Is shifting production an opportunity?

Consumers, authorities, food processors and retailers worried that empty grocery shelves meant nationwide food shortages. Many poultry producers have converted foodservice lines into retail in an attempt to meet the changing consuming demand.

“Exploring supply gaps in the retail channel remains as an opportunity to offset – at least partially – revenue losses from foodservice. However, pressure may still be felt,” JP Frossard, analyst consumer foods at Rabobank, said in a statement. “Some players may face limited availability of retail-size packaging, different specifications and distribution constraints, as well as working capital restrictions during these turbulent times.”

Challenges associated with the shift

Transitioning from foodservice to retail poses numerous problems as the industry tries to remain productive amid a pandemic.

One of the biggest challenges has been the surplus of chicken wings. Foodservice demand for wings usually spikes around major sporting events, such as the National Collegiate Athletic Association’s (NCAA) March Madness. However, March Madness has been canceled due to COVID-19, leaving foodservice suppliers with an excess amount that they are now trying to redirect towards retail with varying levels of success.

Employee absenteeism at plants – either due to sickness or fear of getting sick – is another issue the poultry industry will have to address. Additionally, screening measures that have been implemented to protect employees from getting COVID-19, such as temperature scans, can add costs and slow production in the lines.

View our continuing coverage of the coronavirus/COVID-19 pandemic.

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