UK Poultry Processing Showing Success29 May 2013
UK - The Poultry Meat Processing industry in the UK has managed to pluck success from the jaws of the recession over the past five years, according to a report from IBISWorld.
Far from being hit by depressed income conditions, chicken consumption has doubled in the past 20 years, as its versatility and relatively low price have tempted customers away from pork, beef and lamb, the report says.
The horse meat scandal, implicating only red meat products, has provided a late boost to demand as some consumers trade to chicken as an unaffected option.
IBISWorld industry analyst Patrick Ross, said: “Processors have been able to create a very strong role for themselves by vertically and horizontally integrating to ensure growth and enable them to compete for the largest contracts and this consolidation has mapped closely with the expansion of supermarkets and restaurant chains because larger contracts demand greater supply capacity.”
The industry satisfies approximately 80 per cent of domestic demand, leaving only a small amount to be fulfilled by foreign suppliers. Profitability has been capped by rising input costs but has expanded slowly as the efficiency gains from reorganisation have emerged.
Over the five years through 2013-14, industry revenue is expected to grow at a compound annual rate of 2.9 per cent to reach £4.4 billion. Revenue is forecast to increase three per cent over the current year.
The outlook for the industry is positive, as the popularity of chicken and rising year-round consumption of other poultry meat products continues.
The growth in major markets, led by supermarkets and restaurant chains, is poised to power on, supporting the industry as the economic recovery takes hold.
The recovery could present a threat to industry revenue if consumers trade back to more expensive pork, beef and lamb products.
However, overall demand for poultry is expected to remain constant, since it has become a staple over the past five years.
Mr Ross added: “processors are expected to achieve further efficiency from reorganisation and acquisition, and will use this advantage to compete for ever larger supply contracts.”
Operators will be faced with a dilemma about how much of the growth in the price of raw chicken will be passed on to consumers.
A price point that incorporates some cost increase but stops considerably short of red meats will emerge. Over the coming five years to 2018-19, revenue is forecast to continue to rise.
The level of market share concentration among the major suppliers in the Poultry Meat Processing industry is medium, with the top four firms holding 69.6 per cent of the market.
Supermarkets represent the largest market, particularly as the recession has prompted consumers to move towards shop-bought meals rather than eating out.
For this reason, the industry's major companies have been competing frantically for supermarket supply contracts over the past five years. Major companies include 2 Sisters Food Group, Moy Park and Faccenda Group.ThePoultrySite News Desk