Poultry continues to gain ground within the European meat market, reports Jonathan Thomas
Red meat is in trouble across much of the EU region. In recent years, it has continued to lose share to poultry, mainly as a result of consumer health concerns. In the meantime, the market for poultry meat continues to expand – by 2020, it is forecast that global consumption will overtake pork. Poultry now accounts for a third of total EU meat consumption, a figure which has risen from less than 30% in 2005. During this time, beef and veal has seen its share decline from almost a fifth to less than 16%.
European Consumption
In per capita terms, pork is the most popular form of meat with EU consumers. In 2015, per capita consumption was 41 kg, up by around 1 kg compared with the previous year. Within the EU region, the highest consumers of pork in per capita terms are Austria (56 kg), Poland (55 kg) and Spain (54 kg). The EU’s largest market for pork in volume terms is Germany, where consumption amounted to more than 4.3 million tonnes in 2015.
Per capita consumption of poultry meat drops to 24 kg, a figure which continues to increase. At 39 kg, Portugal is the EU’s leading consumer of poultry meat in per capita terms. The region’s largest markets for poultry meat are the UK and France, where consumption in 2015 was worth 2.3 million tonnes and almost 1.7 million tonnes respectively. UK per capita consumption of poultry meat is now worth round 36 kg, a figure which decreases to just under 26 kg for France.
At the other end of the scale, per capita consumption of beef and veal in the EU countries amounts to no more than 11 kg. This marks a fall from closer to 12 kg at the end of the previous decade, a decrease which has been attributed to reduced supply and weak economic conditions. France and Italy are the EU’s leading consumers of beef and veal – within the last year, for example, French per capita consumption was almost 24 kg. Beef has long been a centerpiece of French cooking, and the country devotes approximately 13 million hectares of land to cattle farming.
The EU region also contains some of the world’s leading meat producers. One leading example is France, which ranks as one of the region’s top three producers for all types of meat (i.e. pork, poultry, beef and veal and sheep meat). In 2015, French meat production was worth more than 5.25 million tonnes, or 11.5% of total output of meat for the EU28 countries within the last year.
With output worth over 1.46 million tonnes, France ranks as the region’s leading producer of beef and veal, while it drops to second spot behind Poland for poultry meat. At around 19%, its share of total EU production is also highest within the beef and veal sector, a figure which compares with 12.5% for poultry meat. In 2015, output was highest for pork, at more than 1.97 million tonnes – this sector accounted for almost 38% of total French meat production.
With more of Europe’s consumers inclined to reduce their meat intake for health reasons, many suppliers have been looking towards value-added products for sales growth. These offer benefits such as variety and convenience, with coated products (e.g. chicken nuggets and breaded portions) one of the better-performing sectors of late. Manufacturers are also turning towards healthier varieties of meat in order to maintain consumer interest, with greater scrutiny of animal welfare leading to more use of various eco-labels (such as Label Rouge in France).
Another issue concerning the European meat industry at present is the impact of the UK’s vote to leave the EU. In 2015, the country imported more than 2 million tonnes of meat, 80% of which was sourced from EU countries. To date, trade within the industry has been largely unaffected, although this may change in the longer term. It has also been hinted that UK prices for meat products such as bacon may rise as a result of Brexit.
Industry Supply
The EU market for poultry meat is dominated by a handful of major suppliers, whose presence partly reflects the large quantities produced by countries such as France, Germany and the UK. The leading EU-based producers are listed below.
French Market
LDC Group of France ranks as Europe’s leading producer of poultry meat, processing approximately 370 million chickens per annum. It operates 75 production sites in France and Poland, and boosted its presence in its domestic market during 2014 by acquiring Avril Group’s Glon broiler assets in Brittany. This business – into which LDC has since invested EUR30m – was later renamed Bretagne Poultry. LDC’s Drosed business is also expanding, and now ranks as Poland’s third largest supplier of poultry meat.
LDC operates two main business units, namely Poultry and Convenience. Poultry is the larger of the two in terms of revenue, where its brands include Maitre Coq and Bio Bresse. The Convenience division includes a variety of products, examples of which include ready meals, sliced and cooked meats and pastry goods such as quiche. LDC leads the French market for frozen ready meals, where its Marie brand accounts for a 15% share of sales.
Germany and BeNeLux
Europe’s second largest poultry meat producer is Plukon Group, which owns the Friki brand – this includes fresh poultry meat, as well as value-added products (e.g. nuggets, schnitzels and cordon bleu portions). Its customers include retailers in Germany and the Benelux countries, as well as foodservice operators and industrial manufacturers. One of its recent areas of focus has been sustainable poultry meat, in response to demands from its domestic customers – as a result, Plukon now raises more than half a million chickens according to higher animal welfare standards.
PHW Group of Germany owns the Wiesenhof brand, which competes in sectors such as fresh and frozen poultry, sausages, schnitzels and other convenience products. Turnover for the company’s Poultry division amounted to EUR1.4bn in 2015, although most of its recent growth has come from value-added meat products, where sales rose by 12.6% within the last year. Its Wiesenhof Bruzzzler is Germany’s leading brand of barbecue sausage, while the company competes in Poland via its Drobimex business. This has recently been expanded via investment worth PLN40m, and is the largest supplier of poultry meat to KFC’s Polish operations.
Italy and the UK
AIA of Italy operates eight production facilities, supplying over half a million tonnes of chicken and turkey meat per annum. In addition, AIA’s range also includes pork, ham and sausages (e.g. frankfurters), as well as convenience lines (e.g. cordon blue portions and chicken nuggets). Its brands include Wudy, which leads the Italian market for chicken and turkey frankfurters, and Dakota, a range of gluten-free sausages.
In the UK, 2 Sisters Food Group has just strengthened its position in the market for turkey meat by acquiring Bernard Matthews, which was put up for sale by Rutland Partners last June. Bernard Matthews had been struggling for some time, due to factors such as falling sales and higher feed costs. The company rears more than seven million turkeys per year, and it is thought that the acquisition by 2 Sisters will result in greater diversification into other sectors of the poultry meat market.
2 Sisters is already a leading supplier of poultry meat. Its UK poultry business (which accounts for over half of the Group’s sales) is made up of 13 sites, and supplies own-label poultry meat to most of the country’s leading supermarkets. Its St Merryn Foods business – which was part of Vion until 2013 – processes beef and lamb products, while its European poultry operations are based in the Netherlands and Poland. The company also supplies value -added meat and poultry products – for example, its Cambuslang site in Scotland is recognised as a centre of excellence for breaded poultry products (e.g. nuggets, goujons and chicken kievs). Its range also includes Hollands meat pies.
Another recent acquisition occurred in March 2016, when the French agrifood co-operative Terrena acquired a controlling stake in Doux Group. Terrena is France’s second largest poultry producer with a 23% share, and has a turnover worth EUR5bn. Doux has been combined with the Gastronome business, which owns the Pere Dodu brand and is also present in Germany and the UK. Also part of Terrena is Elivia, a supplier of beef, lamb, veal and pork products. Its network is made up of 16 processing sites, and its recent emphasis has been on clean-label meat products without artificial additives.
Away from poultry, Danish Crown is Europe’s leading producer of pork, and also has interests in the beef and veal sectors. Latest revenue for the company is worth DKK60bn, of which pork accounts for DKK27bn, or 45% of overall sales. Its major markets are the EU, the US, Russia and Japan, with 90% of output exported. During 2014, the company acquired full ownership of the Polish processed meat company Sokolow for DKK1.3bn.
The European market for value-added meat products is extremely fragmented, largely as a result of the wide diversity of sectors which exist therein. Some of the more notable examples include the likes of Nomad Foods (owner of the Iglo, Birds Eye and Findus brands), as well as Cargill Meats – both occupy a strong position within the market for coated poultry across much of the region. Cargill, for example, supplies Chicken McNuggets to all of McDonald’s 3,000 French restaurants. The Iglo range, meanwhile, includes coated poultry products such as chicken burgers, nuggets and cordon bleu portions.
