British Poultry Council

BRITISH POULTRY COUNCILThe Voice of the British Poultry Meat

Sector

John Reed – ChairmanApril 23, 2013

ABOUT BPC Voluntary trade association representing British poultry

companies and 90% of the British poultry meat industry

Chickens, turkeys, ducks and geese

Member of AVEC (Europe) and IPC (global)

Covers the entire poultry meat chain – primary breeding, hatching, rearing, slaughtering, primary and further processing

Works closely with associated trade bodies (NFU, BEIC, Red Tractor, BRC…)

BPC MEMBERS

SPECIES (MILLIONS OF BIRDS/YEAR)

BPC (2012)

CHICK PLACEMENTS (MILLIONS)

DEFRA (2013)

POULTRYMEAT CONSUMPTION

BPC (2013)

CONSUMPTION IN THE UK (TONNES/YEAR)

DEFRA (2011)

LEADING BROILERS PRODUCERS IN EUROPE

MARKET OVERVIEW

Source: Kantar Worldpanel, 12w/e 17th February 2013

    Aldi

    Lidl

    Iceland

    Waitrose

    Other Multiples

    Sainsbury's

  Symbols &   Independents

 Total Grocers

    Total Asda

    Tesco

    The Co-operative

    Morrisons

-5 0 5 10 15 20 25 30 35

3.7

THE MACRO ENVIRONMENT Total Grocery 12 w/e YoY% Change

The Squeezed Middle

Less disposable income & increased pressure from the rising cost of living

This has resulted in a marked change in shopper behaviour which looks set to stay- the rise of 

the Discounters and the squeezed middle is just one impact

Consumers are clearly managing the impact of inflation by maintaining tighter control over 

their budgets, seeking out the best deals and selective down trading- by either visiting cheaper 

supermarkets or buying cheaper products. i.e. private label instead of branded.

Shoppers reduce the size of their main weekly shop and  visit the supermarket more frequently 

throughout the week, smaller top up shops, reducing waste and allowing for tighter control 

over their budgets.

This has had a knock on effect on promotional mechanics-  Price reduction is now favoured 

over Y for £X and multibuy deals

Beef£6.68 / kg

Pork£5.08 / kg

Lamb£8.67 / kg

Chicken£4.22 / kg

Source: Kantar Worldpanel, 52w/e 17th February 2013

In the same way that savvy shoppers have been trading down into cheaper supermarkets and less expensive products we have also seen switching into chicken from other proteins. This is as a result of both price and perceived health benefits.

HOW HAS THIS IMPACTED FRESH CHICKEN?

£7.69

£7.09

£4.97

£10.46

£5.18

£11.72

£0.00 £2.00 £4.00 £6.00 £8.00 £10.00 £12.00 £14.00

Fresh Chicken Breast Fillets Ave RSP

Fresh Turkey Breast Fillets Ave RSP

Fresh Minced Beef Ave RSP

Fresh Lamb Chops Ave RSP

Fresh Pork Chops Ave RSP

Fresh Salmon Fillets Ave RSP

As the most popular cut of chicken, breast meat is expensive when compared to other popular cuts of protein

HOWEVER WHILST CHICKEN IS CHEAPEST OVERALL…

As a result we have seen a shift in the interaction between tiers and individual cuts within Fresh Primary Chicken.

Consumers have been switching spend from Organic and Free Range chicken into Standard and Value.

Source: Kantar Worldpanel, 52w/e 17th February 2013

Whilst breast meat sales remain strong there is a clear decline in penetration as shoppers switch into dark meat (+9.8% Value YoY) in favour of its lower price. Whole Birds are also popular for their lower £/Kg, leftovers can also be used to produce second meals or sandwiches.

The rise of the Discounters has also been very evident in Fresh Chicken and they have been stealing spend from the Top 4….

Fresh Primary Chicken YoY% ChangeSource: Kantar Worldpanel, 12w/e 17th February 2013

The retailers have placed real emphasis on their quality credentials whilst maintaining low prices. They also generally opt for TPR mechanics over Y for £X and multibuy.

Expect to see increased switching from Red Meat into Chicken- particularly whole muscle

No evidence to suggest that there has been any impact on individual retailers but will consumers become less trusting of those involved? 

In the 12 weeks ending 17th February 2013 there was a 43% value reduction in frozen burger sales and a 13% value decline in frozen ready meals

Increase in the number of shoppers visiting butchers to purchase their fresh meat- It is likely that the scandal may impact value tiered products with consumers becoming unsure about the quality and source. 

Tesco’s Value Fresh Chicken lines have decreased in value by 11% in the last 4 weeks YoY (w/e 17th February 2013) 

The NFU has launched a ‘Buy British’ campaign encouraging shoppers to look out for the Red Tractor logo

Tesco have also announced that from July they will be sourcing all of their Fresh Chicken from British farms- as part of this they will also be committing to a 2 year contract with their producers.

WHAT IMPACT WILL THE HORSE MEAT SCANDAL HAVE ON FRESH CHICKEN?

INDUSTRY ADVANTAGE

Vertically integrated

Short supply chain

Concentrated into a few large companies

High level of control throughout the chain

Customer driven – no UK or EU subsidies

Small carbon footprint

INDUSTRY PRIORITIES

INDUSTRY PRIORITIES

Animal health

Environment

Animal welfare

Food safety

Human health & safety

Affordability

Recruitment

Profitability

Food security

Sustainable intensification

FOOD SAFETY AND HYGIENE

Campylobacter∞ Leader of Joint Working Group with the FSA, NFU, BRC and

Defra∞ Scientific research, biosecurity measures, on-going trials

at farm and plant level

Meat inspection regime∞ Joint work with the FSA to replace visual inspections by

microbiological testing

RESPONSIBLE ANIMAL HUSBANDRY Antibiotic stewardship

∞ Continuous review of usage in poultry flocks∞ Voluntary ban on the use of cephalosporins in poultry

production

Welfare at slaughter∞ Implementation of the EU legislation on the Protection of

Animals at the Time of Killing

UK Poultry Health & Welfare Group∞ BPC, BEIC, GFA, NFU, BVPA

CAREERS & SKILLS

Goals- Attract, recruit, train, develop and retain quality people for the

sector -- Demonstrate professionalism and skills -

∞ Annual scholarships in partnership with Harper Adams College

∞ Poultry apprenticeship

∞ British Poultry Training Programme / Poultry Passport

∞ Awareness & education program in schools

ECONOMIC & SOCIAL CONTRIBUTION 35,000 direct employees + 35,000 indirect

employees

2,500+ farms and 30 food production sites across the UK

Contribution to the economy: ∞ farmgate value £2.25bn ∞ retailer level £4.5bn∞ food service sector £2.5bn

On-going work to facilitate exports of breeding stock & poultry meat

SUSTAINABLE FOOD SECURITY

Responsible sourcing of feed ingredients such as soy or wheat

Environment-friendly policies and standards

Large scale farming to meet the demands of a growing population

THANK YOU FOR YOUR ATTENTION