Which way does chilled water flow for USA-produced poultry exports?
American packers produce chicken more efficiently than any other nation in the world, says Tyson executive. But it may take more than that to crack protected European markets.
We used to ask about marketing trends: "Which way does the wind blow?" For those seeking to market USA-produced poultry into England or Europe the question might now be: "Which way does the chilled water flow?"
The answer depends on the regulations devised in Europe that American food traders perceive as "political" rather than "necessary." USDA inspection procedures are probably the highest in the world, one poultry authority told Quick Frozen Foods International. "We don't really see that EEC or English regulations are any better."
Judging by the speed at which inquiries are processed in London compared with Washington, there may be something in the criticism.
This reporter's inquiries started in Atlanta where Roy Brown, Tyson Foods' vice president of sales and marketing, international division, addressed the International Poultry Trade Show about export markets. He was speaking as a Council member of USAPEEC, but his Springdale, Arkansas-based company already exports poultry to England, Japan and other markets, so what he had to say was relevant and informed.
USAPEEC, he advised, was one of 60 cooperators who work with the Foreign Agricultural Service's government-supported programs that support the export of agricultural products. The Council administers two programs -- one oriented toward market development and one involved in promotion. The development program provides for the operation of overseas offices and those and their marketing activities are underwritten by the Foreign Agricultural Service.
The marketing program includes branded and generic activities with a 1991 budget of $10 million. The generic portion, according to Brown, is for advertising campaigns developed to support the branded activities of US poultry and "to enhance the image of our products in targeted markets." These benefits could include research to determine the viability of products, consumer trends, or a full-blown print and TV campaign in more established markets.
The Tyson executive had something to say about several of these targeted markets, including Russia, Europe, the Middle East, Japan, Hong Kong, and Singapore. Per capita consumption of poultry in the US is 90 lbs., compared with England at 30 lbs., Japan's 28 lbs., Hong Kong's 27 lbs., Singapore's 41 lbs., 23 lbs. in the Middle East and 20 lbs. in Russia. US exports of poultry as a whole increased 52% in 1990.
Why not more then to Europe and England, which Brown described as "the most similar in taste and product preference to the US than any other area in the world?" He answered the question unequivocally in his speech.
As for Europe, tariff and non-tariff barriers are substantial and strict plant regulations prevent most US producers from pursuing Common Market business. These regulations have been perceived to be political and simply for the purpose of protecting Europe's own domestic producers. The changes that are required to obtain EEC approval are often so costly and impractical that American producers have been discouraged from this market.
Has Tyson Foods been discouraged? Well, it has put a brand new plant alongside existing lines for the US market expressly to meet EEC regulations (to which England conforms). In particular, they have implemented the counterflow system in the postevisceration cleansing facility, to which so many American poultry producers have objected.
Can this expenditure be recovered from sales? Quick Frozen Foods International asked Mr. Brown, having heard that Tyson was already in England. And, furthermore, was it all really necessary, from experience?
"No, the expenditure could not be recovered from sales," Brown informed. "It was an investment in the future, something that could not be evaluated right away." He was at pains to point out that he was not simply talking about a single line, but about a complete plant and uniforms, pallets and other requirements "on the enormous EEC list."
"European producers seem to be five to seven years behind the US in the application of technology," he told the conference, "and the need for technologically superior and unique products can only aid US processors in the competition for this huge market of 320 million people."
What unique products does Tyson offer the European markets? Frozen or non-frozen?
"Frozen," clarified Brown. "Value-enhanced products. Not raw poultry."
What about other foreign markets, such as Russia?
According to Brown, over 150,000 tons have been sold to the Soviet Union, primarily by barter. "In an attempt to provide protein, US meat will be sold since we are the lowest cost producer in the world. Although not imminent, the change to a market economy will increase disposable income and increase the likelihood of some type of further-enhanced products. Of course, the political climate could deter this at any time.
"US producers are test marketing further processed chicken products for retail and foodservice in Moscow. As the Soviet Union shifts from soft currency to hard currency, as infrastructure improves and as Western food trends take route, the future will eventually see a transition to these type products."
As for the Middle East: "Exports there have doubled this past year, primarily due to the EEP program which helps US exporters establish contacts and distribution channels that can be utilized for value enhanced products. Traditionally, the Middle East has been strictly a commodity market with whole birds and cut-up comprising the bulk of the business."
"However," he continued, "as fast food national accounts expand, opportunities for US producers and their unique array of products increase. While the Gulf War increased insurance rates over 300% and interrupted most regular business, we feel the Middle East will remain a major net importer of poultry."
How about Japan?
"Japan has always been America's largest market for poultry. However, it remains the most demanding. A company exporting there must pack even commodity products to very precise specifications. Japan is approached aggressively by Thailand and Brazil. In order to retain this huge export market, American producers must invest in plants and research and development to follow Japanese consumer trends.
"Once in Japan, exporters must tangle with the complex and layered distribution network. This network is constructed so as to favor local producers so that they can sell directly to sub-distributors or even directly to the ultimate customer, thus avoiding two or sometimes three layers that imported chicken must contend with. Each level of distribution has with it a mark up which adds to the price of an export and makes it less competitive."
Regarding Hong Kong: "This is America's third largest export market, serving six million people as well as being a large re-export market into China. There had been a trend of Western-style restaurants entering this market that favored American chicken products. It remains to be seen if this trend will continue when Hong Kong returns to the People's Republic of China."
Singapore? "Here is a maturing market, rapidly shifting from traditional Asian-style wet market sales to supermarket and foodservice as we know them in America. Product needs change accordingly."
To what extent can marketing (which includes a precise evaluation of consumer needs) help poultry companies to weave their way through regulations? What differences in marketing nuance has Tyson adopted to reach these various markets?
"All of that is still in the planning stages," he told Quick Frozen Foods International, "but we employ advertising agencies, Saatchi and Saatchi in America and London, and you may be sure these issues are on the agenda."
He told delegates at the Atlanta conference that for many depressed markets, chicken as a low cost commodity (such as leg quarters) is in great demand.
"As the responsibility of governments to improve the standard of living is levied upon them by their people (as is now being seen in the Soviet Union and Eastern Europe), the ability to feed most people with the lowest cost food supply is essential.
"Chicken is the least expensive animal protein to produce, and the United States produces chicken more efficiently than any other nation in the world," said Brown. "As long as people continue to eat, the export market for US chicken is a good one."
PHOTO : Barbecue Style Chicken Wings is one example of the value added items that Tyson Foods would like to export to protected markets in Europe and elsewhere. The microwaveable product features glazed chicken wing sections packed in an 18 ounce retail box.
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|Title Annotation:||Frozen Foods in North America|
|Publication:||Quick Frozen Foods International|
|Date:||Apr 1, 1991|
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