Weathering the Storm
By Jim Knisley
The perfect storm that has buffeted the turkey industry for the past two years has begun to wane.
The storm arrived with Maple Leaf’s listeria problem and the recession. Both eroded consumer confidence. The first eroded consumers’ confidence in the food they buy while the second focused attention on bank accounts and the ability or willingness to spend.
Both hit hard at the deli meat segment of the turkey industry that had been growing. In fact, the deli meat business was spelled G-R-O-W-T-H when it comes to turkey. The whole-bird market had remained flat with its traditional seasonal surges for Thanksgiving and Christmas. But the value-added deli meat sector had been picking up steam with bright prospects ahead.
Phil Boyd, executive director of the Turkey Farmers of Canada, said it all came on suddenly with little warning. The economy had been steaming along, sales were strong and most independent forecasters projected good times ahead. Then the storm hit.
The U.S. economy ran aground and nations everywhere were caught in the whirlpool. Even in Canada, which avoided the worst of the American problems, people were or felt poorer and began to cut back.
One area where they cut back was deli meats. “That was our primary growth driver,” Boyd said in an interview.
Because so much of the growth in the turkey industry was based on increased sales of deli meats Boyd says turkey was likely hit harder than other meat producers. Sales didn’t just slow; they actually fell back.
Mark Davies, chairman of the Turkey Farmers of Canada, said this isn’t just a Canadian phenomenon. Sales have fallen in the U.S. and elsewhere. “Globally, what happened here [in Canada] reflected markets everywhere,” he said.
But it wasn’t just the recession that hit Canadian turkey: listeria “took the legs out from under us,” he said.
From a consumer perspective the reasons are obvious. The listeria outbreak, no matter how well it was handled, scared consumers. They lost trust and trust takes time to rebuild. The recession resulted in a significant jump in unemployment. A rise in unemployment means fewer lunchboxes going out the door every morning and fewer people picking up a sandwich at take-out restaurants. Fewer lunchboxes and fewer take-out sandwiches means less demand for deli meat.
Another factor is cost. Many people were worried that they might not have a job tomorrow or next week and had lost confidence. They took a hard look at their grocery bills and pared them back. This also took a toll on the prepared meat market.