Recession Boosts Grocery Store Sales of Chicken, Analyst and Industry Executives Say

SAN ANTONIO — May 1, 2009 — The recession is boosting sales of chicken at retail grocery stores as consumers look for value even while they cut back on expenditures at casual dining restaurants, a leading analyst and several top industry executives told a seminar for food writers held here recently.

The amount of chicken sold in larger grocery stores increased about four percent in the year ending in February compared with the previous 12 months, Todd Hale, senior vice president for consumer and shopper insights of the Nielsen Company, told writers at a seminar sponsored by the National Chicken Council and the U.S. Poultry & Egg Association. Turkey saw a three percent volume growth, as did pork, while sales of beef were flat and seafood declined about six percent, he said.

“There’s been pretty good growth on a volume basis for the poultry industry,” Hale said, in breaking down grocery store sales data monitored by Nielsen.

Chicken breasts were the leading item with a five percent growth rate, Hale said, adding that nearly all chicken parts saw sales growth during the past year.

Meanwhile, restaurant sales have dropped 10 percent to 15 percent in response to the recession, said Monty Henderson, president and chief operating officer of George’s, Inc., a chicken company, speaking on a panel of top industry executives. “People are saving money by dining out less,” he said.

Product innovation is important in foodservice, added Bernard Leonard, group vice president/food service of Tyson Foods, as restaurant concepts try to weather the downturn.

“In foodservice, particularly in casual dining, same-store sales are down, and one of the responses we have seen is in innovation,” Leonard said. He said restaurant concepts are launching new appetizers, entrees and other items, sometimes on a value basis, to “pull that traffic in. Innovation is helping them to sustain their business.”

As Hale noted, the picture is brighter at the retail grocery level, said Lampkin Butts, president and chief operating office of Sanderson Farms.

“What we’re seeing at retail is very good demand for chicken products,” he said. Sales of fresh chicken at retail grocery stores in 2008 were up 7.5 percent over the year before, Butts said.

“The other thing we are seeing at retail is substitution,” he added. “Consumers are stretching their food dollar, they are looking for value, and they will substitute lower-priced protein for high-priced beef or high-priced pork.”

Meanwhile, products labeled “organic’’ throughout the grocery store have been hit hard by the recession, Hale said, with monthly sales growth dropping from 24 percent in March 2008 to only one percent in March 2009. The number of products making the “organic” label claim has also dropped, he said.

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