• by Karlene Lukovitz  @KLmarketdaily, December 9, 2008

The economy is giving fresh chicken producers something to crow about, as budget-challenged consumers opt for poultry over pricier beef.

Although beef still accounts for about half of all fresh meat sold in the U.S., total retail and foodservice sales of fresh chicken will jump 6.7% to over $47 billion in 2008, while beef sales will grow at a paltry 0.5% to $75 billion, according to a new report from Packaged Facts.

Turkey sales are expected to rise 2.3% and pork 1%--although these will account for just 3% and 10% of the total fresh meat sales, respectively, according to the report, "The Fresh Meat Market in the U.S.: Beef, Chicken, Pork, Turkey and Lamb in Retail and Foodservice." Lamb sales (just 1% of the market) declined by 1%, while "other" meats--more exotic premium selections like bison, Cornish game/hen, duck, veal and venison that make up about 3% of the market--dropped nearly 12%.

In total, the retail/foodservice fresh meat market should gain about 2% this year, to exceed $142 billion. Looking only at retail (excluding foodservice), meat sales overall are projected to dip 1.6% this year, to about $44 billion.

From 2004 to 2008, chicken and turkey sales drove overall growth of retail-only sales--with CAGR's of 4% and 3%, respectively, versus just 0.8% for beef. However, for the total retail/foodservice market, beef still led with a CAGR of 3.3% versus chicken's 2.5% during the five-year period.

PF points out that the more rapid recent growth of chicken versus beef dollar sales at retail--while reflecting an upswing in chicken volumes purchased--does not reflect a decrease in volume of beef purchased. Instead, beef dollar sales reflected consumer decisions to opt for cheaper cuts of beef. "New York strip steak may have been traded for less expensive skirt steak," the analysts note. "Shoppers may have opted for less expensive store-brand ground beef over Certified Angus."

PF projects total retail/foodservice fresh meat sales to grow at a CAGR of 2.8% between 2008 and 2013, with chicken leading the pack at 3.7% and beef and turkey both growing at 2.5%.

Looking at rankings of U.S. meat marketers by 2007 fresh meat sales only, Tyson Foods, Inc. rules the roost, followed by Cargill Meat Solutions, Smithfield Foods Inc., JBS Swift & Co. and Sysco Corp., according to PF's estimates.

Among the big players, PF notes that Tyson chairman John Tyson stated in October that the company plans to expand domestically and internationally by buying companies while their prices are low as a result of the global credit crisis. Tyson also has benefited recently from troubles at competitor Pilgrim's Pride (ranked #6 by '07 fresh meat sales), which announced that it expects to see significant losses in its fiscal Q4 and may experience financing issues.

The report also notes two key developments on the regulatory front. The U.S. Dept. of Agriculture-Food Safety and Inspection Service is finalizing regulations that will, if adopted, change nutrition labeling for single-ingredient meat and poultry products from voluntary to mandatory. In addition, as of Sept. 30, federal law requires labels on meat (along with other perishable items such as fruits and vegetables) to state country of origin.