RABOBANK said that it expects poultry production in Vietnam, Indonesia, India and the Philippines (VIIP) to grow in the next five years, driven by higher incomes and increased dining out.
“This growth pattern is supported by the significant millennial population in VIIP, who not only have a comparatively higher income but also are more likely to dine out and try different food options. These preferences will further boost the growth in food service,” Rabobank Consumer Foods Analyst Umesh Madhavan said in a statement late Thursday.
“In VIIP, consumption preferences are increasingly gearing towards snacking and convenience. The growing acceptance of eating out and food delivery are proof of the changing behavior,” according to Mr. Madhavan.
The Dutch bank’s Animal Protein Senior Analyst Ben Santoso said that much of the growing demand for poultry-based foods will be serviced by smaller outlets, thugh imports could erode margings for VIIP poultry growers.
“Poultry producers therefore need to fine-tune their strategies to secure long-term margins and market share. A key would be to invest in the food service channel either by developing the competence to be fully engaged in consumer-facing outlets or by establishing partnerships,” according to Mr. Santoso.
“For example, chicken fast-food kiosk chains appear well-suited to win in the changing consumption landscape of VIIP as they tick all the boxes when it comes to accessibility, infrastructure and direct consumer interaction,” Mr. Santoso added.
Rabobank research said dressed chicken output has increased by 8.7% on a compound annual growth rate (CAGR) basis between 2007 and 2017, with growth rates in Central Luzon and Eastern Visayas at 12 to 14%, accelerating over the last two years to as much as 60%.
CALABARZON, Western Visayas, Zamboanga, and Northern Mindanao which posted CAGR of below 10% during the period, may have picked up to between 12 and 15% in the last two years.
“Besides capital and technical know-how, the further-processing industry has relatively low barriers to entry. We expect new entrants (both foreign and domestic) to commoditize further-processed poultry products and to tigthen margins,” Rabobank said.
“With more slaughtering capacity coming online, we expect more ready-to-eat ambient products to emerge, seeking higher margins. The expansion of convenience stores as outlets for processed products may also be seen as another way to protect market share and margins,” it said. — Reicelene Joy N. Ignacio