Covid-19 is disrupting the business in ways the global poultry market had never planned for, creating new areas of opportunity and risk. The impacts of Covid-19 are spread very unevenly between regions and between companies. “Company leaders and investors need to constantly review market conditions and adjust company positioning to optimize growth and returns. There will be bigger differences between winners and losers, which will lead to a process of accelerated capital investments, consolidation, and internationalization in the coming years,” according to Nan-Dirk Mulder, Senior Analyst – Animal Protein. We have identified three stages of Covid-19’s impact on the global poultry industry:
Stage 1 – Covid-19 Disruption (2020): Significant disruption in markets, trade, and supply chains, with bigger differences in performance between companies than ever seen before.
Stage 2 – Dual-Market Road to Recover (2021): More big impacts, which global and regional industries will experience this year.
- Ups and downs of the pandemic in 1H will lead to ongoing impacts on channels, with peaking retail and online demand and low foodservice demand, especially during lockdowns. Conditions will start to gradually recover when Covid-19 becomes a bit more controlled in 2H 2021 and into 2022 as vaccinations become more widely used. This all happens in a context of high and volatile feed costs.
- From a demand perspective, there will be a dual-market trend defined by consumers with high spending power driving up demand for premium products at retail on one side, and by price-focused consumers who’ve been economically affected by the pandemic on the other side.
- Key themes for investors during stage 2 will be market positioning, cost control, procurement, and supply management. Consolidation will also gradually accelerate.
Stage 3 – The Aftermath (2022): The return of bullish investment opportunities for the global industry in a post-Covid-19 environment, wherein key investment themes will be different than before Covid-19.
- Poultry demand will be characterized by strong, ongoing demand despite ASF recovery and alternative protein growth.
- Distribution channels will change, with continuing, robust at-home and online sales, which will also change product mix opportunities.
- Value chains will become more digital, smarter, and more sustainable, and food and input security will push toward more local supply and pressured trade.
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