Chicken merchandisers are entering a challenging marketing era.

After years of steady increases in per capita consumption, many consumers are decreasing—and in some instances eliminating—their purchases of poultry.

Chicken is becoming a victim of a harsh economic environment in which cost-conscious shoppers are dining out less and seeking to cut expenses by purchasing fewer proteins.

Yet, chicken remains a major supermarket magnet, and astute retailers still are positioned to generate greater revenues by leveraging sales strategies that address shoppers’ interest in value, quality and convenience.

The U.S. Department of Agriculture estimates that the average American in 2008 will eat 86.3 pounds of chicken, down from 86.6 pounds in 2007 and 87.7 pounds in 2006, but up from 78 pounds in 2000.

Bill Roenigk, senior vice president for the Washington, D.C.-based National Chicken Council (NCC), says consumption of chicken that is purchased from supermarkets remains steady, with the most significant cutbacks occurring at upscale restaurants.

Yet, supermarket sales also are likely to decline with the emergence of higher chicken prices in 2009, he notes.

Indeed, though retail chicken already is about 10 percent more costly than a year ago, current prices do not yet reflect the 20 to 30 percent increase this year in supplier feed costs.

“Prices will have to adjust in 2009 because producers can’t continue to lose money,” Roenigk notes.

Suppliers, meanwhile, will produce about 36.2 billion pounds of chicken in 2008, compared to 35.7 billion in 2007, the NCC reports. Exports, which are up 13 percent from a year ago, are triggering some of that growth, Roenigk notes.

Consumers will spend about $30 billion for supermarket chicken this year, compared to $27 billion in 2007, he says. About 55 percent of domestic chicken is purchased at groceries.

Even if sales drop, however, total chicken revenues may increase in 2009 as Roenigk projects that the average price of whole chickens will jump from about $1.15 a pound to approximately $1.40.

“The hope is consumers will look at chicken and say, ‘The price is higher, but it is still a good value compared to beef and pork,’” Roenigk states. “But consumers may trim meat purchases altogether if household budgets remain pinched because of the economy.”

More shoppers already are embracing less-expensive poultry, including ground chicken and dark meats, such as leg quarters and thighs.

“Boneless/skinless breasts will remain popular because they still are the most convenient, nutritious and flexible item,” Roenigk says. “But consumers also will consider other choices that are priced more favorably, including whole carcass chicken and drumsticks.” Dan Emery, vice president of Pittsburg, Texas-based Pilgrim’s Pride Corp., a leading poultry supplier, agrees.

“Because of the lower cost, shoppers are buying cuts of meat that were traditionally less popular,” he states. “As a result, dark meat is in high demand.”

He adds that rising poultry prices have not yet affected sales.

“Chicken still is the best value among the proteins and is versatile,” Emery states. “It can be sold raw, cooked, or ready to cook, and in the meat case, deli or prepared foods areas.”

Though some shoppers may stop buying chicken as prices increase, there still are growth opportunities for retailers, says Robert Goldin, executive vice president of Technomic Inc., a Chicago-based foodservice research and consulting firm.

He notes that more consumers—trying to stretch their food dollars—will likely purchase proteins from groceries instead of eating out.

Indeed, he says foodservice revenues are projected to increase just 2 percent in 2008, the lowest growth rate since the early 1990s.

The greatest demand for supermarket chicken will come from such segments as aging baby boomers seeking nutritious meals and the expanding base of Hispanic shoppers who already are strong purchasers of poultry, analysts say.

Goldin notes that while chicken “has a healthy image with consumers,” merchandisers still need to sustain that aura by constantly stressing product attributes. That includes having the “natural” designation clearly displayed on labels.

“Natural often is equated with ‘fresh,’ and ‘fresh’ resonates with shoppers,” he states.

Operators also should emphasize chicken’s affordability, he notes.

“Price is most important because many customers are looking for value,” Goldin says. “Chicken is seen as lower cost and more economical than beef, seafood and pork. Comparing the price of chicken to the other proteins should be a fundamental marketing position.”

Kevin Beam, director of poultry procurement for Hickory, N.C.-based wholesaler Merchant Distributors Inc., meanwhile, says demand is growing for all meats that are perceived as value items.

Yet, Beam notes that even some higher-cost value-added poultry, such as pre-seasoned boneless/skinless breasts, also are becoming more popular.

As a result, merchandisers also should target the potent base of consumers who are willing to spend more for convenience and quality, he states. Effective marketing vehicles include product labels and point-of-sale signage.

Messages that resonate with consumers focus on sustainability, humane treatment of animals, chicken’s role as a snack-friendly food and its use in fully cooked meals, Goldin adds.

“Some supermarkets already are generating huge revenues by selling prepared chicken-based dinners for home consumption,” he says.

Indeed, in a June online survey of 1,096 adults by Ewing, N.J.-based PKS Research Partners, 62 percent of respondents noted that they are cutting expenses by eating at home more.

The study also found that consumers are most frequently eating chicken that was purchased from groceries.

Respondents indicated that they ate chicken at home an average of 3.2 times during the two weeks prior to the survey, up from 2.7 times in 2007.

However, 15 percent of respondents also noted that they had not eaten any chicken during that period, up from 9 percent in 2007.

Yet, the increase in non-eaters is offset by the growth of “heavy” chicken buyers who ate the protein at least eight times during the two weeks. The “heavy” segment now comprises 23 percent of consumers, up from 14 percent in 2007.

Chicken’s perceived value is among the factors motivating such shoppers to purchase the protein.

Fifty-three percent of respondents, for instance, noted that they are using chicken to help stretch the household food budget.

Large groups of consumers also indicated that they would be “very” or “somewhat” likely to purchase chicken with environmentally friendly packaging (66 percent), a country-of-origin package label (60 percent), if it was locally raised (58 percent), if it was developed with a production method with greater sustainability for the environment (54 percent), and if it had a reduced carbon footprint (46 percent).

The study also found that the majority of shoppers also want to save time and money without sacrificing quality.

Sixty-six percent of respondents, for instance, indicated that taste is important when selecting food. It was followed by price (noted by 61 percent of respondents), nutrition (47 percent), family preferences (42 percent), visible fat content (38 percent), ease of preparation (30 percent), packaging (15 percent) and availability of recipes and serving instructions (12 percent).

“Taste trumps all,” states Michael Sansolo, president of Sansolo Solutions, a Potomic, Md.-based consulting firm and former senior vice president with the Arlington, Va.-based Food Marketing Institute. “The worst value for consumers is when they have to throw away a product” because it is foul tasting.

He recommends that merchandisers stress poultry quality in their marketing.

“A less expensive product is not a value if no one wants it,” Sansolo says.

Retailers, to keep the category vibrant, also should consistently expand their chicken selections by offering new flavors and convenience-oriented products, he states.

“Consumers don’t want to get bored, and they are looking for merchants to lead them to a new way of eating,” he adds.

To spur sales, however, it is crucial that merchandisers carry products and devise marketing campaigns that address the unique customer segments and competitive dynamics of each retail location, analysts say.

Already following that formula is Riesbeck Food Markets Inc., a St. Clairsville, Ohio-based operator of 15 stores in Ohio and West Virginia. The retailer, which primarily competes against lower-cost Wal-Mart Supercenter and Kroger outlets, promotes its chicken by emphasizing price.

Rusty Stephen, Riesbeck director of meat and seafood, says the company also keeps poultry “top of mind” by highlighting two to three chicken items in its weekly ad.

“We strive for value and want to be the cheapest in town,” he states.

Stephen, Sansolo and Goldin spoke on chicken merchandising in July at the NCC’s Chicken Marketing Seminar in Hilton Head, S.C.

An evolving chicken sector also is triggering the launch of enhanced packaging as suppliers respond to greater shopper interest in convenience and freshness.

Costco Wholesale Inc., Issaquah, Wash., for instance, is merchandising Pilgrim’s Pride and Foster Farms-branded chicken in saddle packs that were developed by Duncan, S.C.-based Sealed Air Corp.’s Cryovac Food Packaging division.

The vacuum packages, which are made from breathable rollstock thermoform film, consist of six perforated pockets that enable consumers to easily separate portions for meal preparation, and refrigerate or freeze the remaining portions in the original packaging.

Saddle packs support both boneless and bone-in poultry and are hermetically sealed and leak resistant. The packets also eliminate frost and dissipate odors, says Don Smith, Cryovac director of North American poultry and seafood marketing.

Cryovac this year also began merchandising its sustainable NatureTRAY and NaturePAD products that are created with polylactic acid polymers (PLA).

The absorbent NaturePAD has a biodegradable top layer, renewable pulp fluff core and non-woven bottom layer made of polypropylene and PLA polymers.

In addition, the company is rolling out EZPak, a polypropylene modified atmosphere package with a vacuum sealant and easy-open pull-tab that is intended to eliminate purge. Whole Foods Market Inc. is the primary retailer selling poultry in EZPak containers.

Cryovac also is supplying Simple Steps‘ microwaveable packaging that features vacuum-skin film that contours to the poultry for an appetizing presentation, the company reports.

Simple Steps‘ also has self-venting technology to eliminate microwave splattering, the risk of steam burns and the need to puncture ventilation holes in the film, the company notes.

“Packaging is changing to meet the specific needs of sub segments of consumers,” Smith says.

Under development are packages and bags that will enable users to cook raw poultry in the oven or microwave without removing the chicken from the containers, adds Jim Belcher, Cryovac director of North American marketing for case ready products.