bill roenigk roenigk consulting july 13, 2015 amelia island, florida

Which Will Come First100 Pounds of Chicken Consumption

or Pigs Fly?

Bill RoenigkRoenigk Consulting

July 13, 2015Amelia Island, Florida

Consumption = Disappearance

We Eat What We ProduceMinus Exports/Plus Imports

andAdjustment for Inventory Change

Over 90 Percent of Chicken Consumption Can Be Explained by Price and Disposable Consumer Income.

Corn for Ethanol Experience from 2006 through 2013 and Weak U.S. Economy Re-Confirmed this Conclusion.

USDA’s Three Measuresof Chicken ConsumptionWeight 2015 Difference FromMeasurement Pounds Carcass Weight

(estimated) ---------------- % ---------------

Boneless 62.8 60Retail* 90.0 86Carcass 104.7

* Most often reported by USDANote: “Chicken” includes young meat chicken and (broilers) and “other” chicken (spent fowl)

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20062008

20102012

20142016

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0p

ou

nd

s p

er

pe

rso

n (

reta

il w

eig

ht)

Average Annual Growth Rate: 1.9%

Per Capita Chicken Consumption

1970 to Forecast 2016

Source: USDA

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Per Capita ConsumptionChicken, Beef, and Pork1970 to Forecasted 2016

Beef Pork Chicken

po

un

ds

pe

r p

ers

on

Beef

Chicken

Pork

USDA Data

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

180.0

190.0

200.0

210.0

220.0

230.0

Per Capita ConsumptionOf All Meats Combined1970 to Forecast 2016

po

un

ds

pe

r p

ers

on

Average = 204.8

USDA Data

When Chicken Consumption Surpassed

Pork and Beef?Pork Beef

--------------------------------------- weight basis ----------------------------------------

Retail Boneless Retail Boneless

Year 1982 1994 1992 2010

Source: USDA/ERS

Consumption ≠ Demand

Demand:Pounds Consumed

Price Consumers Paid

Outcome Compared with Expectation (Elasticity)

U.S. Monthly Domestic Retail Meat Demand

Ron Plain, University of Missouri

  Pork Beef Young Chicken Turkey All 4 Meats

 CurrentMonth

Last 12Months

CurrentMonth

Last 12Months

CurrentMonth

Last 12Months

CurrentMonth

Last 12Months

CurrentMonth

Last 12Months

  Percent Change in Retail Demand From 1 Year Earlier

Mar 14 0.9 4.9 1.8 1.3 7.8 3.2 -3.9 0.0 3.2 2.7

Apr 14 6.7 5.0 4.0 1.0 3.3 3.4 -8.1 -0.7 4.1 2.7

May 14 10.0 5.6 6.8 1.5 -1.6 3.1 -4.6 -0.7 4.6 2.9

Jun 14 3.8 5.4 1.6 1.5 0.5 3.1 -3.1 -0.6 1.7 2.9

Jul 14 3.7 5.2 0.7 1.5 -2.1 2.9 -10.0 -1.2 0.2 2.8

Aug 14 3.0 4.9 9.3 2.0 -1.3 2.3 -3.9 -1.4 4.0 2.7

Sep 14 9.3 5.6 11.4 2.9 -1.9 1.4 -10.0 -2.6 5.6 2.9

Oct 14 8.1 5.7 8.7 3.3 -0.6 0.7 -1.9 -2.7 5.2 2.9

Nov 14 7.2 5.8 11.0 4.1 6.4 1.1 -9.8 -4.7 7.3 3.2

Dec 14 6.8 5.8 10.3 5.1 2.5 0.7 -7.1 -6.1 6.3 3.4

Jan 15 15.0 6.7 16.3 6.9 13.8 2.5 -9.7 -6.5 14.1 4.9

Feb 15 11.6 7.2 12.5 7.9 3.8 2.6 -6.2 -6.5 8.9 5.4

Mar 15 12.3 8.1 7.6 8.4 4.1 2.2 -1.4 -6.3 +7.4 5.8

Apr 15 2.2 7.7 5.1 8.5 6.2 2.5 1.8 -5.5 4.6 5.8

U.S. Annual Domestic Retail Meat Demand

Pork Beef Young Chicken- Turkey All 4 Meats

Percent Index Percent Index Percent Index Percent Index Percent Index

Change 1998 Change 1998 Change 1998 Change 1998 Change 1998

Year Ago 100 Year Ago 100 Year Ago 100 Year Ago 100 Year Ago 100

1998 100 100 100 100 100

1999 0.4 100.4 2.8 102.8 4.9 104.9 -2.7 97.3 2.6 102.6

2000 -0.2 100.2 2.5 105.4 -1.5 103.4 -1.1 96.3 0.5 103.1

2001 -0.7 99.5 3.2 108.7 -1.2 102.1 3.6 99.8 0.9 104

2002 0.3 99.8 -0.2 108.6 6.2 108.4 -2.4 97.4 1.7 105.8

2003 -1 98.8 3.9 112.9 -0.6 107.7 -1 96.4 1 106.8

2004 0.6 99.4 6.5 120.2 6.6 114.9 -4.1 92.5 4.8 111.9

2005 -3.8 95.6 -2.7 117 0.3 115.2 -5.1 87.7 -2 109.7

2006 -3.7 92.1 -3.6 112.7 -7.8 106.2 1.5 89 -4.8 104.4

2007 1.9 93.8 0 112.8 -0.3 106 3.4 92 0.5 105

2008 -4 90.1 -4.5 107.7 -1.1 104.8 5 96.6 -3 101.8

2009 1.4 91.4 -2.7 104.8 -2.4 102.3 5.8 102.2 -1.5 100.3

2010 -1 90.5 -1.4 103.3 0.9 103.3 -0.4 101.8 -0.5 99.9

2011 1.1 91.5 0.8 104.1 -1.2 102.1 0.9 102.7 0.4 100.3

2012 -0.6 91 1.3 105.5 0.8 102.9 -0.4 102.4 0.5 100.7

2013 4.6 95.2 1.7 107.3 3.5 106.5 0.6 102.9 3 103.7

2014 5.9 100.8 4.9 112.6 0.5 107.1 -6.1 96.7 3.4 107.3

Ron Plain, University of Missouri

U.S. Annual Domestic Retail Meat Demand

Total US – Fresh Meat SalesApril 2015

Dollars – Total

*Other includes Exotic, Non Meat and Unknown.Sourced from FreshLook data, categorized by the VMMEAT® System Four Weeks Ending 04/26/15

  4 WEEKS 13 WEEKS 52 WEEKS

Class 03/30/15-04/26/15 % Change WE 04/26/15 % Change WE 04/26/15 % Change

TOTAL MEAT $3,745,481,375 + 2.5% $12,041,933,846 + 5.4% $48,671,130,047 + 6.4%

Beef $1,781,419,933 + 3.9% $6,021,368,088 + 6.2% $23,880,828,635 + 6.7%

Chicken $892,058,810 + 5.2% $2,959,060,559 + 5.7% $11,676,704,401 + 6.3%

Pork $815,656,674 - 0.8% $2,297,902,048 + 4.7% $9,340,375,880 + 5.8%

Turkey $173,244,091 + 0.5% $539,953,666 + 4.2% $2,815,970,775 + 5.3%

Lamb $49,126,346 - 3.4% $114,628,943 + 6.0% $386,027,454 + 9.5%

Veal $5,994,263 - 15.6% $22,018,096 - 9.1% $89,881,417 + 0.2%

Other* $27,981,258 - 23.9% $87,002,445 - 24.7% $481,341,485 + 7.7%

Pounds - Total  4 WEEKS 13 WEEKS 52 WEEKS

Class 03/30/15-04/26/15 % Change WE 04/26/15 % Change WE 04/26/15 % Change

TOTAL MEAT 1,089,178,886 - 1.1% 3,400,869,454 - 1.4% 14,159,367,976 - 2.9%

Beef 325,846,289 - 5.5% 1,128,593,717 - 7.0% 4,579,589,836 - 7.8%

Chicken 371,264,841 + 1.8% 1,232,147,402 + 1.3% 4,933,538,056 + 2.4%

Pork 317,561,955 + 2.8% 823,869,876 + 4.5% 3,098,732,968 - 4.8%

Turkey 58,823,286 - 6.2% 173,385,432 - 0.4% 1,346,612,890 + 1.0%

Lamb 7,255,632 - 8.9% 16,259,386 + 0.1% 53,812,431 + 5.0%

Veal 853,486 - 21.9% 3,207,869 - 13.9% 13,407,166 - 0.5%

Other* 7,573,397 - 34.5% 23,405,773 - 38.7% 133,674,629 - 10.4%

Average Price/Pound  4 WEEKS 13 WEEKS 52 WEEKS

Class 03/30/15-04/26/15 % Change WE 04/26/15 % Change WE 04/26/15 % Change

TOTAL MEAT $3.44 + 3.7% $3.54 + 6.9% $3.44 + 9.6%

Beef $5.47 + 9.9% $5.34 + 14.2% $5.21 + 15.7%

Chicken $2.40 + 3.4% $2.40 + 4.3% $2.37 + 3.8%

Pork $2.57 - 3.6% $2.79 + 0.2% $3.01 + 11.1%

Turkey $2.95 + 7.1% $3.11 + 4.6% $2.09 + 4.2%

Lamb $6.77 + 6.0% $7.05 + 5.9% $7.17 + 4.4%

Veal $7.02 + 8.0% $6.86 + 5.5% $6.70 + 0.7%

Other* $3.69 + 16.2% $3.72 + 22.7% $3.60 + 20.2%

Total US – Fresh Meat Feature and PromotionApril 2015

Feature Outlet Count - Total

  4 WEEKS 13 WEEKS 52 WEEKS

Class 3/30/15 - 4/26/15 % Change WE 4/26/15 % Change WE 4/26/15 % Change

TOTAL MEAT

967,512 4.4% 3,066,111 0.3% 12,006,354 -8.1%

Beef 361,600 3.9% 1,201,310 8.1% 4,416,475 -10.7%

Chicken 246,837 1.8% 791,722 -12.0% 3,459,069 -5.0%

Lamb 29,800 -18.3% 70,080 -6.9% 242,380 -17.9%

Pork 237,240 22.8% 751,420 5.3% 2,713,100 -9.5%

Turkey 87,625 -14.1% 237,429 1.0% 1,125,460 1.9%

Veal 4,410 -14.7% 14,150 -40.4% 49,870 -41.5%

Class – Fresh meat cuts, ground meat and poultry parts. Excludes ham, bacon, franks, sausage, lunch meats, prepared products and offal. Feature Outlet Count – Total of sample stores with ad. Feature Outlet Share – Outlets with ad as a percent to the total ad outlets. Feature Average Price – Total outlets with ad times the ad price divided by the ad count. Promotion Percent on Sale – Feature sales as a percent to total sales. Promotion Weighted Sale Price – Feature sales divided by feature pounds.Source by USDA Market News and FreshLook Marketing, categorized by the VMMEAT® System

Feature Outlet Share - Total  4 WEEKS 13 WEEKS 52 WEEKS

Class 3/30/15 - 4/26/15 % Change WE 4/26/15 % Change WE 4/26/15 % Change

TOTAL MEAT

100.0%   100.0%   100.0%  

Beef 37.4% -0.2% 39.2% 2.9% 36.8% -1.0%

Chicken 25.5% -0.6% 25.8% -3.6% 28.8% 0.9%

Lamb 3.1% -0.9% 2.3% -0.2% 2.0% -0.2%

Pork 24.5% 3.7% 24.5% 1.2% 22.6% -0.3%

Turkey 9.1% -1.9% 7.7% 0.1% 9.4% 0.9%

Veal 0.5% -0.1% 0.5% -0.3% 0.4% -0.2%

Feature Average Price  4 WEEKS 13 WEEKS 52 WEEKS

Class 3/30/15 - 4/26/15 % Change WE 4/26/15 % Change WE 4/26/15 % Change

TOTAL MEAT

$4.16 2.7% $4.18 9.3% $4.09 10.1%

Beef $6.05 6.8% $5.98 10.9% $5.89 15.1%

Chicken $2.61 4.4% $2.63 5.0% $2.70 6.7%

Lamb $6.99 1.1% $7.19 5.0% $7.27 4.5%

Pork $2.91 -8.5% $2.91 1.7% $3.12 11.7%

Turkey $2.88 8.8% $3.11 0.3% $2.79 1.9%

Veal $8.78 15.0% $8.58 24.3% $8.10 13.7%

Promotion – Percent on SaleAnd Weighted Sale Price

  4 WEEKS 13 WEEKS 52 WEEKS

Class 3/30/15 - 4/26/15 WE 4/26/15 WE 4/26/15

TOTAL MEAT

25.9% $3.12 26.4% $3.12 25.9% $2.93

Beef 25.1% $5.28 25.5% $5.07 25.0% $5.00

Chicken 23.4% $1.93 24.7% $1.95 24.4% $1.96

Lamb 33.6% $2.45 35.5% $2.54 31.3% $2.71

Pork 19.1% $2.28 17.2% $2.45 27.3% $1.31

Turkey 38.2% $5.67 27.6% $6.01 21.9% $6.04

Veal 12.4% $6.56 12.7% $6.45 15.0% $6.08

Retail Beef Performance

FreshLook Marketing and USDA Market News

April 2015 Highlights can be downloaded at:

http://www.beefretail.org/CMDocs/BeefRetail2/Sales%20Data/Sales%20Featuring/4-15-Top-Line-Final.pdf

USDA Chicken Weight Category

4.25 pounds & under: normally marketed bone-in into fastfood/foodservice sectors; may include Cornish hens.

4.26 pounds to 6.25 pounds: normally marketed into retail grocery sector in tray-pack or bagged forms.

Source: USDA/Agricultural Marketing Service

USDA Chicken Weight Category6.26 pounds to 7.75 pounds: normally

marketed either into retail grocery sector in tray-pack and quick-frozen form or further processed and marketed into various sectors.

7.76 pounds & heavier: normally marketed deboned or as roasters/roasting chickens.

Source: USDA/Agricultural Marketing Service

Cont’d.

Young Meat Chicken Slaughtered Under FederalInspection by Liveweight Category4.25

pounds& under

4.26 to 6.25

pounds6.26 to

7.75liveweigh

t

7.76 pounds

&heavier

Total Number

of Chickens

Year -------------------------- percent ------------------------- --000--

2014 26.4 34.2 19.5 19.9 7,962,523

2013 26.9 35.5 19.4 18.3 7,968,913

2012 24.2 40.7 19.3 15.6 7,874,506

2011 23.0 42.9 19.1 15.1 8,085,700

2010 24.1 47.2 16.4 12.3 8,334,894

2009 24.9 50.5 13.9 10.7 8,117,428

2008 25.4 48.5 15.1 11.0 8,388,473

2007 26.5 49.5 16.2 7.8 8,402,576

2006 28.2 49.7 13.9 8.2 8,343,196

2005 29.3 47.9 16.7 6.1 8,351,179

Sou

rce:

US

DA

/Ag

ricu

ltu

ral

Mark

eti

ng

S

erv

ice

Share and Change in Number of Chickensand Weight for Liveweight Categories

4.25& under

4.26 to6.25

6.26 to7.75

7.76& heavier

Year number

weight

number

weight

number

weight

number

weight

2014 26.4 16.6 34.2 31.3 19.5 22.5 19.9 29.6

2005 29.3 20.6 47.9 48.1 16.7 21.7 6.1 9.6

Change From2005 to 2014

---------------------------------- percent ----------------------------------------

-10 -19 -29 -35 17 4 226 208

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20062008

20102012

20142016

20182020

202235.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0

105.0

Per Capita ConsumptionChicken

1970 to projected 2022

po

un

ds

pe

r p

ers

on

(re

tail

we

igh

t)

Average Annual Growth Rate: 1.9%Average Annual Growth Rate: 1.9%Average Annual Growth Rate: 1.9%

-6%

-4%

-2%

0%

2%

4%

6%

8%

-5%

7%

-1%

1%

Per

cent

Carb Processed Total Processed FoodProtein Processed Commodity Protein Index*

Exhibit 1: Volume consumption of processed protein foods has grown 7% since 2009 com-pared to a 5% decline in processed carbohydrates from 2009 to 2013.

Source: Nielsen xAOC, USDA. *Commodity Protein Index developed by Credit Suisse by multiplying USDA-measured domestic use of beef, pork and chicken (in pounds) by the average retail price index of each pro-tein as measured by USDA's Economic Research Service. Source: The Return of the Caveman, April 2014. Credit Suisse.

What Factors Could Accelerate/Decelerate Consumption

Trend Line

Price/Cost

State of U.S. Economy in Future years

Impact of Competing Meats

New Products

“Events”

Thank You for Your Attention!

Any Questions?