Striking A Balance
August 1, 2006
Striking A Balance
By Lynn Petrak,
Special Projects Editor
Special Projects Editor
In a year with swings in supply, protein companies keep new products coming and marketing campaigns on target.
Anyone who’s been in this business long enough understands that there is a natural ebb and flow to the marketplace, whether driven by economic situations, such as oversupplies or undersupplies, or by fickle consumers who may be “on” or “off” certain types of diets during a given period in time.
So where does that leave the current state of the industry for meat and poultry? The answer, as it has been for many years, includes some common aspects but often depends on the particular category. Each commodity-based business is by nature subject to a host of variable factors, some within processors’ control and others well beyond it.
From a numbers standpoint, the operating environment often drives business decisions and the current climate is no exception. In times of high supplies, which is now occurring in some protein categories, meat companies and, in turn, their foodservice and retail partners, are looking to recoup as much cost as possible while moving product through efficiently. In times of tight supplies and lower production, processors and those that merchandise meat and poultry must apply other innovative initiatives designed to ride out the situation and keep value-minded consumers satisfied.
Overall, U.S. per capita consumption of pork, turkey, lamb and veal in 2006 dipped from the previous year, as chicken and beef consumption each increased. Indicators for 2007 domestic consumption point to a slight uptick for each category, except for chicken and lamb and veal, which are expected to hold steady at their current per capita consumption rates, depending on production for the rest of the year.
As statistics move one way or another, processors are keeping marketing on the table as a priority. Programs tied to product, promotion, packaging and price help generate sales and volume more aggressively, communicate key messages and address cost issues.
One way to successfully market a brand or product, of course, is through new product development. On that front, there has been no shortage of innovation in this business, especially in the debut of value-added products. Picking up on consumer signals for foods that are more convenient and flavorful, processors across all species continue to ramp up R&D of items that are pre-seasoned, fully cooked and packaged in user-friendly ways.
Making a significant splash this year in product development has been a boon of “natural” items. Companies looking to differentiate their brand and keep up with consumer preferences have rolled out several natural product lines that are defined as minimally processed, including fresh meats, processed meats and deli meats. Also continuing to make inroads in sales and case presence are products packing a punch of flavor, including both raw and cooked items.
In addition to product development, processors are engaging in other marketing efforts to boost or at least maintain current consumption levels. Advertising and public-relations campaigns, including those implemented by industry-funded programs and individual companies, have turned up on the airwaves, in the pages of consumer and foodservice trade publications, and in various online venues to help generate interest — and, ultimately, sales. Merchandising programs with partners in sales and distribution channels are also in place to get out the desired word about respective proteins.
In short, while the state of the industry is not quite the Charles Dickens literary theme of “It was the best of times, it was the worst of times,” the industry is undergoing a continual evaluation shaped by forces occasionally within but mostly beyond it. NP
|Meat and Poultry Forecasts|
|Production (millions lb.)||85,476||85,441||87,097||89,760||91,699|
|Per capita consumption (retail lb.)||218.9||221.4||220.9||222.5||223.8|
|*Per capita meat consumption data are revised, incorporating a new population series from the Commerce Department’s Bureau of Economic Analysis based on the 2000 Census.|
Source: World Agricultural Supply and Demand Estimates and Supporting Materials
Published in Livestock, Dairy, and Poultry Outlook, www.ers.usda.gov/publications/ldp