THE NETHERLANDS, Utrecht. The poultry industry is experiencing a historical change on different levels, according to the latest Rabobank report.
So far, markets have reacted in different ways to the disruption brought by the Covid-19 crisis, separating consumption habits among consumers, companies in terms of performances, and regions around the globe, if we take into consideration the distribution channels.
There are three stages observed by the Senior Animal Protein Analyst Nan-Dirk Mulder:
Stage 1: Disruption (2020) - significant disruption in markets, commerce and supply chains, with greater differences than ever in history in performance between companies.
Stage 2: Road to Dual Market Recovery (2021) - Larger impacts that global and regional industries will experience this year. The ups and downs of the pandemic in the first quarter will lead to continued impacts on channels, with a spike in retail and online demand, as well as low demand for food services. Conditions will gradually begin to recover as Covid-19 becomes a little more controlled in the second half of 2021 and in 2022 as vaccines become more widely used. All this happens in the context of high and volatile feed costs. From a demand perspective, there will be a dual market trend defined by high purchasing power consumers that will drive the demand for premium retail products on the one hand, and price-focused consumers on the other, economically affected by the pandemic. The key topics for investors during Stage 2 will be market positioning, cost control, procurement, and supply management. Consolidation will also gradually accelerate.
Stage 3: Aftermath (2022) - The return on bullish investment opportunities for the global industry in a post-Covid-19 environment, where the key investment themes will be different from those before the pandemic. The demand for poultry will be characterized by strong and continued demand despite the recovery of ASF and the growth of alternative proteins. Distribution channels will change, with continuous and strong sales at home and online, which will also change product mix opportunities. Value chains will become more digital, smarter, and more sustainable, and food and input security will drive increased local supply and more pressured trade.