Page 2 - National Poultry Newspaper

Costco chook change worth a roast or toast?
Poultry Industry Calendar of Events
2018
NOV 11 - 13 – Australian Veterinary Antimicrobial Stewardship Conference, Sunshine Coast, QLD www. avams2018.w.yrd.currinda.com
2019
FEB 12 - 14 – International Poultry Expo, Atlanta, US www.ippexpo.com
FEB 17 - 20 – Australian Poultry Science Symposium, Sydney NSW http://sydney.edu.au/vetscience/apss
JUN 10 - 13 – European Symposium on Poultry Nutrition, AmberExpo in Gdansk, Poland www.espn2019.com
JUN 23 - 26 – European Symposium on the Quality of Poultry Meat and XVIII European Symposium on the Quality of Eggs and Egg Products, Izmir, Turkey www. eggmeat2019.com
How to supply event details: Send all details to National Poultry Newspaper, PO Box 387, Cleveland, Qld 4163, call 07 3286 1833 fax: 07 3821 2637, email: design@poultrynews.com.au
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COULD Costco change the face of Australian chicken processing and retailing?
That’s the question I’ve just put to myself, after learning the US retail gi- ant, which has more than 500 outlets in the US and 200-plus in other coun- tries, including 10 in Aus- tralia, will be processing its own chickens this time next year in Dodge Coun- ty, Nebraska.
It’s all about turning a profit on sales of rotisserie chickens, which Costco has held down at a loss- leading price of $US4.99 since 2010.
They reportedly sell 157,000 every day.
Wow.
The obvious rationale is shoppers come in for a hot chicken and leave with a trolley full of groceries and other items.
Since 2010, Costco’s rotisserie chicken sales have grown by more than 8 percent annually – three times the growth rate of total US poultry con- sumption.
Costco has, according to foodprocessing.com. au, minimised its losses on those chickens by gen- erating energy savings courtesy of using bigger ovens and less-expensive packaging.
Three primary driv- ers have led Costco to bring its poultry supply in-house: continuity and
surety of supply, visibil- ity up the chain and cost control.
The Nebraska complex will be able to process 100 million birds a year, with one-third of the rotisserie program being produced in-house.
The facility will also process chicken parts.
To put that into an Aus- tralian context, 664 mil-
lion chickens were slaugh- tered here in 2017/18.
It seems Costco’s move is the first time a US retailer has integrated its meat sup- ply to the farm level and as- sumed the risks associated with animal husbandry, including feeding, animal welfare, disease prevention and harvesting.
If its move into produc- tion and processing is suc-
cessful, it could well be the model for other food retailers and foodservice companies to vertically integrate in other protein sectors.
Costco itself is an inter- esting beast, where shop- pers pay $60 a year for the privilege of shopping in their wholesale stores.
According to Costco co-founder Jim Sinegal, it offers lower prices and better value by eliminat- ing virtually all frills and costs associated with con- ventional wholesalers and retailers, including sales- people, fancy buildings, delivery, billing and ac- counts receivable.
Costco offers two mem- berships: Business mem- bers qualify by owning or operating a business, while Gold Star member-
ship is available to indi- viduals.
All members get a free additional card.
Costco warehouses are open seven days for all members.
With Australian chicken meat consumption edging upwards to 1kg per per- son, per week, Costco may well set its sights on adopt- ing the vertical integration model Down Under.
Coles and Woolworths sell about 90 million roast chickens a year, so the market is here.
Industry sources suggest that at $8 a roast chicken, there’s no profit in it for the big two, but add a dol- lar or two and it becomes more attractive.
Aldi in Australia prefers to have its outlets as roast chicken-free zones.
Cant
Comment
by BRENDON CANT
NATIONAL
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WELL FED
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Page 2 – National Poultry Newspaper, November 2018
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