RABOBANK has said that investors in poultrymeat businesses should prepare for an uneven recovery to markets over 2021 and, in the longer-term, changes to distribution models.
The bank’s research arm has outlined three stages to the pandemic – ‘Disruption’, ‘dual market to recovery’ and ‘The Aftermath’.
Disruption covers the pandemic’s initial shock: the closure of out-of-home food outlets and growth in demand at retail.
At the same time, staffing problems and logistical issues presented more challenges.
“In general, the poultry industry was more affected by Covid-19 that the other protein industries, including pork, beef and eggs in 2020,” the report’s author Nan-Dirk Mulder said.
“The key reason for this is the industry’s high dependence on out-of-home channels and in particular on sales to foodservice and wet markets worldwide.”
‘Dual markets and the road to recovery’
This year Rabobank expects the pandemic to be gradually brought under control, although disruption to remain high in the first half of 2021.
European consumers will split into those who have a stable economic position versus those who’s finances have been affected by the pandemic.
Shoppers with higher purchase power are likely to seek out premium foodstuffs to replace restaurant spending.
They have savings from lower activity during lockdowns and travel restrictions.
Those economically impacted will be looking for value and trading down in products, retail concepts and food service, the report says.
“Ups and downs of the pandemic in the first half of the year will lead to ongoing impacts on channels, with peaking retail and online demand and low foodservice demand, especially during lockdowns,” Mr Mulder adds.
“Conditions will gradually recover when Covid-19 becomes a bit more controlled in the second half of 2021 and into 2022, as vaccinations become more widely used.
“This all happens in the context of high and volatile feed costs.”
Providing vaccination programmes are effective, Rabobank expects growth for the global poultrymeat sector to resume.
But there will be some significant changes. A return to offices is expected, but there has been a ‘permanent shift’ to higher levels of home working.
Home delivery and online food sales will continue to grow, and there is an opportunity for smaller operators to offer fresh produce with distinct branding.
Sustainability and welfare will remain important factors in consumers’ minds, as will the concept of supporting local communities.
Supply chains will also become more digital as online distribution becomes more common.
“We can expect further changes in markets and supply conditions in the short and long term,” said Mr Mulder.
“These big changes will require constant fine-tuning by investors to optimize their position under changing short- and long-term market conditions.
“Companies that do this right will be able to outpace the industry and strengthen their individual market position.”