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Welcome to the Thomas Index Report for the week of May 17th.
A few weeks ago, we talked about how recent delays in the glass jar supply chain led to a delay in pickle packaging, which caused a subsequent delay in the debut of Burger King’s new chicken sandwich. While that’s just one example of the effects of the jar shortage, it illustrates how a single wrinkle in the supply chain can cause a chain reaction of issues.
Sorry to all of the fast food fans out there, but I have some more bad news — it looks like pickles aren’t the only element of that popular sandwich that’s in short supply. This new problem affects Popeyes, KFC, McDonalds, and other popular chains.
Seeing a theme here? We’re currently experiencing a nationwide shortage of chicken.
That’s right, the ubiquitous staple of the American table has apparently become so popular that meat suppliers can’t keep up with surging demand. Chicken has been the most popular meat in the United States since the 90s, but we haven’t seen shortages like this in recent memory.
So what’s ruffling the feathers of this critical supply chain today?
First, a surge in popularity is driving continued demand, fueled by popular fast food offerings and the ease of cooking chicken at home. Second, the major winter storm in Texas a few months ago hindered operations for major processing plants, like Tyson. And third, COVID-19 led to plant closures, worker shortages, and logistical challenges that caused unpredictability in the supply chain.
It’s been a seemingly non-stop barrage of supply chain issues in the face of skyrocketing demand and popularity, essentially creating a perfect storm to drive prices higher than usual. According to The Wall Street Journal, the price of some cuts of chicken have doubled over the last year and are 50% higher than the average price of the meat over the past 10 years.
On the Thomasnet.com platform, searches for meat packing and processing equipment have increased 60% year over year, and spikes over the past few weeks have been even more substantial. But while suppliers are quickly scaling up operations with new equipment, it will take time to get production underway and products delivered to your local grocery store or restaurant. For example, last month, Tyson opened its first new plant in 25 years, a $425 million chicken processing facility located in Tennessee, but it’s not expected to be fully staffed until 2023.
And as we approach Memorial Day weekend, which is often recognized as the unofficial start of the summer season, pressure on the already strained supply chain is expected to worsen. Based on historical demand, chicken sales are strongest during grilling season. So what should Americans plan to put on the grill for future dinners?
Enter meat alternatives.
Judging by the recent flurry in merger and acquisition activity in the plant-based meat sector, alt meat is quickly gaining traction. In fact, the plant based food and beverage sector is expected to reach $32.3 billion by 2027, an increase of more than $20 billion in only 8 years. In the shorter term, Nielsen data says that grocery store sales of alternative meat products rose 264% over the past two months, much faster than growth pre-COVID. While chicken is apparently the hardest meat to replicate with plant proteins, new chicken alternatives are expected to debut this summer.
I’m Tony Uphoff, and this is the Thomas Index Report.
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