Consumers Are Eating More Chicken than Ever Before
Today, the low-margin, cost-conscious grocery store industry uses rotisserie chickens as a loss-leader product. Many Americans visit the grocery store to buy rotisserie chickens on a weekly basis, and leave with other, higher margin products too. In 2017, a whopping one in every two Americans bought a rotisserie chicken.
The best show of rotisserie chicken’s status as a loss leader is that they are cheaper than uncooked chickens. Because they're a popular product, they tend to bring in foot traffic, with 625 million rotisserie chickens sold in 2020. Costco kept theirs priced at $4.99 when other stores raised prices, despite losing $30-40m annually from their rotisserie chicken business, because the extra foot traffic paid for itself with more high-margin goods.
When Amazon.com acquired Whole Foods, one of the first products they cut prices on was the rotisserie chicken.
In ways like this, chicken meat has been a life-long staple for many. But unlike pork and beef, chicken wasn't very popular until recently.
Chicken was initially for the wealthy
In the 1800s, chicken was more expensive than other meats in the US, and was exclusively for the wealthy. Today though, the birds now account for 76% of the 30 billion land animals living on US farms. So what happened?
During WWII, a shortage of pork and beef forced American consumers to find other sources of protein. In Europe, it wasn't until the 1990s, when widespread fear of mad cow disease caused many consumers to stop eating as much veal and beef.
Even chicken wings were originally thrown out until 1964 when Teresa Bellissimo started calling them Buffalo wings and serving them at her restaurant. Today, 1.4 billion chicken wings are consumed on Super Bowl Sunday alone, and – each year–Americans eat roughly 8 billion chickens.
In the 1980's, doctors and governmental health bodies began worrying about saturated fats coming from over-the-top consumption of beef and pork. While those specific fears have subsided, they had a lasting effect. Chicken's health reputation, on the other hand, is clean.
Chicken becomes the most widely-traded meat
And as incomes rise around the world, more of the global population wants to eat meat: demand for chicken is growing even faster in poorer countries. The most widely traded meat today, chicken is a classic example of how margin-sensitive parts of the food supply chain react to consumer needs: different parts of the world prefer lean meat to dark meat, some places demand chicken feet while others are willing to consume nuggets.
In a way, they’re the opposite of cars: in the car industry, the supply chain adds value by assembling disparate parts into a finished product; in the chicken business, the value creation comes from disassembling chickens into a profit-maximizing configuration. When the demand for one kind of chicken product rises, the supply of other parts goes up, too. In the US, chicken breast costs almost twice as much per pound as legs; in other countries, chicken breast is actually cheaper.
Today's chickens are up to 4x bigger
As the poultry industry has grown, farmers have looked to increase efficacy by trying to grow much larger chickens in the same amount of time as they used to grow smaller chickens.
Today’s chickens can clock in at over 4x the weight of chickens from the 1950s.
