The COVID-19 pandemic has changed the world. Where the broiler and egg industries are concerned this change has occurred not only in sourcing and production but right through to interaction with clients and consumers.
Both sectors have responded well to these changes, but which changes will last and which will simply fade away as the world gradually returns to normal?
In late April 2021, WATTPoultry International sought the views of representatives from both industries to look at how their businesses and markets have evolved and which of the changes will be long-lasting.
Consolidation
Joost Sparla, marketing and technical director poultry with ForFarmers, looking at the European broiler industry, argued that the pandemic had driven consolidation in the industry, necessitating more integrated ways of working. At the same time, it has accelerated already emerging consumer trends that will endure beyond the pandemic.
Joost Sparla, marketing and technical director poultry with ForFarmers, sees not only greater integration occurring in the European broiler market but the need to alter product and service offerings to reflect altered consumer habits and preferences.
Pointing to the example of the Netherlands, he noted that, prior to the pandemic, there were 11 slaughter companies that, together, slaughtered 11.3 million birds per week. Now there are only 9, slaughtering 9.5 million birds each week - a decrease of 16%.
Pre-COVID, Dutch broiler production comprised 40% slower growing birds, sold mainly at retail, and 60% regular birds destined for foodservice or for export. It has been in the regular bird segment where companies have been hit the hardest due to the closure of the restaurant and catering sectors, and have gone bankrupt or been taken over by competitors.
Sparla predicts that there could be still further consolidation.
While in Europe the various parts of the production chain may be under different ownership, the various players are increasingly engaged in what he referred to as “fertile integration,” where the various parts of the production chain have different owners, but they co-operate very closely.
The biggest feed companies, for example, are increasingly cooperating with slaughterhouses, and one Dutch feed mill has recently taken a minority stake in a local slaughterhouse.
“Co-operation in the chain is important and, in the broiler chain, you have to do it very well. If you make mistakes, then you are out,” Sparla stressed.
Home/office balance to improve
In terms of the day-to-day operations within ForFarmers, Spaarla noted that 95% employees are still working from home. This is working well, but where innovating or brainstorming are concerned, the situation is not ideal.
This will change, however. In the post-COVID world, he expects this office/home balance to improve. We have all become familiar with software for meetings but Sparla believes that new technologies, rather than harming working relationships, will benefit interaction.
For example, he noted that while farm visits are now highly restricted this is fostering the adoption of systems that remotely monitor farms in real time.
Rather than this new technology being a substitute for farm visits, it will enable the sales force to work in smarter ways. When visits do occur, representatives will be armed with remotely gathered information, offering them an extra tool.
It is not only at producer level that there will be long-lasting change. As we are all well aware, the pandemic has altered consumer behavior, resulting in demands that were already emerging to quicken their pace.
With the reduction, or closure, of foodservice, and the shutdown of overseas travel, those consumers remaining in employment have more money to spend in supermarkets and this is fostering demand for products deemed to be of higher quality.
Sparla notes the increase in demand, already strong in the Netherlands, for concept birds, such as slower growing, higher welfare, or those produced with lower greenhouse gas emissions, and a stronger interest in higher quality meat in general. Ever-more consumers are now prepared to pay for these birds.
At the beginning of March 2021 for, for example, the Netherlands’ largest supermarket chain Albert Heijn announced that its birds would be raised to the 1 Star Better Life concept, administered by the Dutch Society for the Protection of Animals, by 2023. Lidl and Jumbo have announced similar changes. Together, these three retailers account for two-thirds of the Dutch market.
As 2021 progresses and we move into 2022, the market should become stronger but along the way there is likely to be more consolidation, along with more integrated ways of working, greater adoption of digital concepts and more demand for concept birds.
Outlook for eggs
Greg Hinton, vice president of Sales with Rose Acre Farms, looked at how demand patterns are evolving in the U.S. and how producers are responding.
When the pandemic hit the U.S., a lot of consumers did not want to enter supermarkets. Retailers were quick to respond, offering online shopping and home delivery.
According to Greg Hinton, vice president of sales with Rose Acre Farms, working patterns will continue to evolve, while innovation in retail channels will mean that egg producers will need to not only ensure that they offering that volumes that consumers want, but that packaging can withstand increased handling.
What has become highly popular amongst U.S. consumers is online ordering with at store pick up. Hinton noted that, within half an hour of an order bring placed, consumers can have their shopping placed directly into the car trunk. This means that there is no interaction with supermarket staff, and he believes that this is a change that is likely to remain.
While some consumers may drift back to in-store shopping as ever-more of the population is vaccinated, services such as home delivery or store collection are expected to remain for the long term. In fact, a survey conducted at the start of this year revealed that 75% of consumers felt they would continue their new habits and behaviors.
To keep consumers supplied and happy, retailers are continually coming up with new ideas and they will continue to innovate.
Strong demand for eggs will continue. However, with the way that consumers are interacting with supermarkets to purchase their eggs, or with purchases being made direct from farm, packaging may need to change.
Does packaging need to be stronger to resist extra transport and handling? Do more multipack variations need to be made available? Hinton noted that his company was investing in technology to overwrap two-and-a-half-dozen and five-dozen cases, as consumers are staying at home and eating more eggs there. He noted that the company had seen demand for 18-pack and two- to five-dozen packs triple.
Foodservice difficulties waning
Foodservice in the U.S., as in the rest of the world, has been devastated by the pandemic. Between March and October 2020, more than 100,000 restaurants in the U.S. had to close their doors and some will never reopen.
Yet, like the supermarkets, the sector has displayed creativity, with outdoor dining, online ordering and pick up. Quick-service restaurants, for example, have added more drive-thru space.
With restaurants now reopening, Rose Acre’s food service sales are now recovering, although they remain below pre-COVID levels, but encouragingly, some clients are now ordering more than they did prior to the pandemic.
While vaccination will help with this sector, what will work against it will be changed working patterns.
Hinton noted that, particularly in the U.S., consumers on the way to work might stop at a drive-thru for a breakfast sandwich. While demand in this area may too be slowly recovering, a certain amount of the workforce will never go back to the office everyday, which will impact sales negatively. Similarly, office workers based at home will be preparing lunch at home, not visiting a restaurant.
Within Rose Acre, those employees that could work from home were moved to home working when the pandemic struck.
While there is talk that vaccination will bring employees back into offices, this remains uncertain and new ways of working will continue to evolve.
Hinton cited the example of one large retailer that had announced that it would move its offices from being city center to a smaller building in the suburbs and many staff working from home.
What will this mean for client interaction? Hinton believes that it may mean rented meeting space for client visits or greater use of lunch or dinner meetings, and there will likely be a lot of empty space that could be converted for this purpose.
As in the European broiler sector, the US egg market is increasingly turning to cage free and organic, reflecting a general greater consumer interest in food and health.
The gradual return of foodservice will continue to boost both the broiler and egg industries, but its consumers habits and lifestyles have changed, and the foodservice channel will take some time to return to pre-COVID levels. | vichie81| iStock.com
