Convenience: The Key To Growth For the Chicken Industry

May 29, 2003

“The key to growth in our industry is to give consumers more of what they want – tasty and appealing food products that save them time and effort and make their lives simpler and more enjoyable.”
I would like to brief you on the chicken industry’s current standing and where we think it is going.

It is difficult to talk about our industry without sounding like an agricultural economist. So I’ll tell you as a man who runs a business that produces food for people to eat.

The chicken industry doesn’t exist in a vacuum. The prosperity of our industry depends to a high degree on the ups and downs of our competitors — primarily beef and pork. When beef is abundant and relatively low in price, chicken can not be expensive.

We are also subject to fluctuations in the price of grain, especially corn and soybeans. Corn is actually the largest single cost input in the production of chicken. When corn or soybeans are expensive, our companies are squeezed at the bottom line because it is very difficult to pass on these added costs.

Fortunately, all these factors are lining up in our favor right now. Corn and soybeans are in good supply and the prices are relatively stable. If weather patterns hold, we expect the harvest this year will be good and that favorable prices will be with us for another year.

There are many factors in the cattle cycle, including returns to the producer – the cattle owner, that is. Returns have been low for the past couple of years. Also, the Great Plains has been in a drought condition for several years now. Cattle producers sent more animals to market than normal to get them off the range. Consequently, the cattle supply is relatively tight and will probably remain so because it takes several years to expand the herd. This is good for the chicken industry.

Returns have also been low in the hog industry in recent years. The hog supply is also relatively tight and will probably remain so.

That leaves an opening for chicken, and I am confident that chicken companies will take advantage of this opening, as they have in the past. It is much easier for chicken companies to expand production if they choose to do so. Also, if our export markets return to levels close to normal, supply will be in better balance with demand. You may have heard that our overseas customers prefer dark meat while American consumers prefer white meat. That is true. And almost half the chicken is dark meat. So good demand from our foreign customers is important to balance the demand for white meat here at home.

I am cautiously optimistic that both production and domestic consumption will continue to increase in the next year and a half.

What this means for consumers is a continuing supply of chicken at affordable prices even while the price of beef and pork will probably continue to go up.

Now, obviously, consumers are not concerned with the cattle cycle or the price of feed corn or any of those things that people in our business worry about. They want to know, what’s for dinner? Studies suggest that 50 percent of Americans do not have a good answer to that question at four o’clock in the afternoon. With busy schedules and much to do, dinner planning often does not get a very high priority. You are going to hear more from Harry Balzer this afternoon on how people are handling the dinner question. But it is no secret that people today are in a hurry and simply do not have as much time to prepare and enjoy the evening meal as they have in the past. This fact has tremendous implications for those of us who produce, process and market food.

You may have a really great product but, if it takes too long to prepare, it is just not going to fly. A product that can be prepared in only a limited number of ways is not going to fly. Convenience and versatility are the factors driving the market today. And these factors are very much in our favor. Chicken is quick and easy to prepare. Chicken tastes good and it’s good for you.

Chicken companies are responding to this opportunity with an array of convenience-oriented products.

In the grocery meat case today, you can find all kinds of chicken nuggets and nibblers, chicken strips and patties, and fresh chicken marinated in a variety of flavors. In the frozen food aisle, you will find chicken strips and chicken burgers, Buffalo wings and individual, quick-frozen breasts. We are continually expanding our offerings in retail groceries.

On top of that, we have also seen the rotisserie roasted chicken boom continue to expand. Ready to eat rotisserie chicken is sold by carryout shops, casual dining establishments and grocery stores. We do not have a good fix on how much rotisserie is being sold but it is a lot. It undoubtedly accounts for the fact that sales of whole chickens by our processors, after declining sharply for many years, have now stabilized and have actually increased slightly in the past few years. Whole chickens now account for about 11 percent of all the broilers processed in the country. It had gone as low as 10 percent but has come back as a result of the rotisserie boom.

Buffalo wings are a great story all by themselves. You can now find Buffalo wings in practically every casual dining establishment in the country and they are increasingly being sold directly to the public. Buffalo wings are one of the most successful snack-type items since somebody first thought to put popcorn in a microwave.

We expect to continue to sell half or more of our industry’s production as fresh chicken in grocery stores. But that category, frankly, is not where the growth is. Convenience foods and foodservice items of all kinds have a tremendous potential for growth.

The key to growth in our industry is to give consumers more of what they want – tasty and appealing food products that save time, effort and make their lives simpler and more enjoyable.

The importance of convenience products to the chicken industry is not new.

One of the original convenience products was the chicken nugget. As some of you may know, the concept of a chicken nugget was premiered right here at the National Chicken Cooking Contest back in 1971, when Mrs. Norma Young of Arkansas won the grand prize with her Dipper’s Nuggets Chicken. Mrs. Young used a piece of whole-muscle meat to make her nuggets and fried them in oil. Mrs. Young was a culinary pioneer.

The last time we held this contest, in 2001, the winner also used a convenience product. Tuscan Chicken Cakes with Tomato-Basil Relish was the winning dish, created by Bob Gadsby of Montana. He used three cups of chopped and shredded chicken in his recipe, and it came from a rotisserie chicken that we bought for him in Sacramento. Bob’s recipe was very much in tune with the times.

Turning to this year’s contest, let me say our industry sincerely appreciates the hard work of all the media people who will serve as judges and those of you who are here to observe and report on this great event. We are looking forward to a spirited competition, and may the best cook win.

by Elton Maddox, President and CEO, Wayne Farms LLC, Chairman, National Chicken Council


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