Talkin' 'bout a revolution

A turbulent year for the poultry sector looks set to close with a frontline battle between welfare and cost. Carina Perkins reports

Speaking at the Oxford Farming Conference in early January, McDonalds chief executive Steve Easterbrook predicted, Over the next few years, animal welfare will become a mass topic of concern for the general public. At the same conference, secretary of state for environment, food and rural affairs Hilary Benn said that a move to ban eggs from battery cages was a long overdue step and warned that farmers will see an increase in demand for chickens that have been raised in better conditions.

Neither Easterbrook nor Benn could have predicted quite how quickly and dramatically their prophesies would come true. Just one week after the conference, both Hugh Fearnley-Whittingstall and Jamie Oliver aired programmes investigating mass-produced poultry. Britains celebrity chefs declared war on intensive farming practices in Britain, and announced that chicken was the front line of animal welfare.

After years of buying cellophane-wrapped chicken breasts, without a thought for the life of the bird they came from, consumers were forced to face up to the reality of their food and the impact was astronomical. In the months following the exposs, shoppers bought millions more free-range and organic birds. According to data from TNS Worldpanel, sales of free-range birds increased by 35% in January 2008, compared with January 2007. In March, an RSPCA survey revealed that 73% of consumers were buying higher-welfare chickens. Sales continued to soar through Easter, with spend on free-range birds up 51% year-on-year in the 12 weeks leading up to 20 April, 2008.

The impressive increase in sales might have been even higher had producers been able to keep up with demand. George Finch, partner of Medium Rare a company that supplies butchers with high-welfare meat and poultry says the sudden increase in demand completely caught us by surprise. Medium Rare sources its chicken from Packington Poultry, a free-range enterprise run by Alec Mercer. We had taken the view that post-Christmas sales would drop and Alec had scaled back production, only to find that demand rocketed, says Finch.

Although an increase in demand was good news for free-range farmers, many struggled to produce enough birds to satisfy existing business and new customers. Suddenly, everyone wanted free-range chickens and it came from every angle from butchers to restaurants to high-volume wholesalers, Finch explains. We had our existing customers, which we had to put first, and then plenty of extra orders on top.

The slower nature of free-range production meant that the increase in production was a slower process than it would have been using intensive practices. Production-wise, the farm is quite small-scale; we do around 1,800 chickens a week to extremely high welfare standards, Finch says. We ramped up production as quickly as we could, but our method of production means that you need at least 10 weeks lead time to finish the chickens.

Butchers were well-placed to reap the benefits of the free-range stampede, but were frustrated by the fact that there were simply not enough birds on the market to increase sales. There was definitely an increase in demand, but there were no free-range chickens around, so it just made supplies tighter and prices higher, explains Chris Godfrey of Frank Godfrey in Islington. We have always sold a lot of free-range chickens, so we had our normal supply, but it was extremely difficult to source extra birds.

SUPPORT NEEDED

Unable to source sufficient free-range birds in the UK, supermarkets turned to French chickens and imported the deficit, much to the fury of the NFU, who insisted that it was important for consumers and retailers to support the British poultry industry if they wanted high-welfare birds in the future. All poultry farmed in the UK, no matter what production system is used, is world-leading, said NFU poultry board chairman Charles Bourns.

John Mettrick, of J W Mettrick & Sons, agrees that sourcing locally-produced British chicken is more of a priority than free-range, as long as welfare standards are high. John does not sell free-range chicken because, he jokes, If farmers were to rear free-range birds where we come from on the Pennines, the chickens would end up in Sheffield whenever there was a strong wind.

Instead, John sources birds from local farmers and finds that consumers are happy enough with the welfare of the chickens he sells. After the programmes we had to do a fair bit of explaining about the difference between our locally reared chicken and intensive birds, but once they understand, they are happy to buy it, he says. We are lucky in that our poultry suppliers are all local farmers with their own abattoirs and large sheds with natural daylight.

John insists that despite the sourcing problems they created, the TV programmes were beneficial to butchers in the long run. The more that TV chefs programmes make a connection between the farm and meat, the more butchers will benefit, he says. Long may those sort of programmes continue.

The impact of the free-range revolution is evident in sales figures for the year. Total spend on poultry rose by 6.6% year-on-year in the 52 weeks leading up to 7 September, but total volume decreased by 0.6%, suggesting that people were buying more expensive birds, but fewer of them. Butchers increased their share of the poultry market spend by 5.6%, although the four major multiples continue to dominate.

Increase in spend might have been higher, had the chicken campaign not been dealt a major blow. Despite the incredible initial response and pledges from Fearnley-Whittingstall that we are going to do everything we can to make sure that this is not a flash in the pan, the battle lines were redrawn when food prices started to soar and the economy crashed.

CREDIT CRUNCH

Fast-forward nine months from the frenzied sales of free-range poultry and the picture is quite different. Squeezed by the credit crunch, consumers are starting to switch from premium lines to economy and the reality is that many simply cannot afford to buy free-range. The supermarkets who so fervently sought out free-range lines have started to fight on economy grounds again and chicken, which Hugh Fearnley-Whittingstall once described as right at the heart of supermarkets price wars with each other, was once more reduced to 2 in Asda.

Defending the controversial move by the multiple, Asdas PR manager Emma Broadbent said: The reality is that, while some customers are choosing to trade up to organic or free-range, with the credit crunch starting to bite and household bills on the increase, many others cannot afford to make that choice.

So what impact has this had on butchers? To be honest, not much, says Chris. We have always had a loyal customer base, who understand what we are all about, and we sell a lot of free-range chickens. John agrees that sales of his high-welfare birds have remained steady over the past year.

What John has noticed is that people are buying fewer whole birds and looking for offers. People are not buying so many whole birds, but choosing smaller portions such as fillets and diced chicken, he explains. We are trying to do deals with chicken, such as five chicken fillets for 7.50. John is confident that chicken sales will hold up through the economic crisis because it is still one of the cheaper proteins available. Chris agrees, and says that chicken will always sell because it is a staple part of peoples diets.

The biggest problems that butchers are facing is not a drop in demand but an increase in costs. John has noticed a considerable increase in price recently. Wholesale prices have increased dramatically we were probably paying 1.20/kg and that has gone up to as much as .1.50/kg, he reflects.

Chris points out that other costs are also soaring. Our electricity bill for the factory has gone up from 1,000 to 3,000, which is a lot of money to find, he says. The problem is that we dont want to put prices up, because peoples pockets are already being squeezed by the economy and they might not buy the chickens if they are much more expensive. When it comes to promoting poultry, John recommends that butchers try and do some offers on poultry to get customers through the door. Do some packs of cut-up chicken and run promotions on them alongside loose sales, he suggests. The most important thing is to get customers in the shop. If you have to put something on that does not make as good a margin, then that is what you have to do.

PLAYING FAIR

John says he is reluctant to pass cost increases on to consumers, but stresses the importance of continuing to pay a fair price to suppliers. Through all of this, it is important to keep the relationships with farmers going, because we rely on these people to keep us in business, he says.

Chris also pays a premium to his suppliers, and says that butchers looking to keep poultry sales up should look for birds with a point of difference. Butchers need to ensure that they have a product that really stands out, he says. An example is Chris Fredricks Label Anglais chickens, which are free-range, slow-growing and have a much better flavour. There is a lot of diversity in terms of breeds and types of chicken, which all come with different price tags, and butchers should give people the choice to buy according to what they can afford. To keep costs down, John suggests that butchers buy chickens whole and do the boning out themselves. There is a lot more money to be had in whole birds rather than buying them in ready-done, he says. If you have a cooked side to the shop, you can use the darker meat in sandwiches and pasties.

Perhaps the best news for poultry at the moment is the fact that, while wholesale prices have risen, they are small compared to the increases seen in beef, pork and lamb. Although TNS data for sales leading up to September show that turkey sales have fallen by 4.4% year-on-year, John believes that financial difficulties might boost turkey sales this Christmas. The way that beef and pork prices have gone, turkey will be an attractive option this year, he says. But they might buy joints and rolls rather than whole birds. Its going to be an interesting time.

The true impact of a long-term downturn in the economy remains to be seen. According to Charles Bourns, director of British Chicken Marketing, there are rumours of another television programme early next year, which might renew interest in welfare. Until then. John says, butchers are left wondering whether people will still be prepared to pay for the all-singing, all-dancing free-range chicken in a few months time, or just go and buy a nasty frozen bird from the supermarkets.

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