(Bloomberg) — Australians are turning to chicken over pricey steaks as surging living costs squeeze household budgets.
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Poultry producer Inghams Group Ltd reported a 268.6% spike in net income from 12 months earlier, half-year results showed Friday. Earnings before interest, taxes, depreciation and amortization climbed 28.8%.
The result was driven in-part by consumers switching to relatively cheaper chicken and choosing to eat at home in response to soaring costs for everything from mortgage repayments to rents and gasoline.
“While there has been a significant acceleration in inflation in recent times which has seen poultry prices rise, poultry continues to be the protein of choice and remains significantly more affordable than red meat,” Inghams said in its earnings statement. The firm reckons it produces 440 million kilograms of chicken a year, mostly sold in Australia and New Zealand.
Poultry prices in Australia fell 1.4% in the final three months of 2023 from the prior quarter, according to Bloomberg’s proprietary Barbecue Index. While it showed beef slid about 1.5% and lamb more than 12%, both came down from higher levels.
Beef is still more than four times more expensive than chicken, with the average retail price for a kilogram of chicken about A$6.40 in 2023, compared with A$26.60 for beef, A$19 for lamb and A$14 for pork, according to data compiled by agricultural consulting firm Episode 3.
“Beef is still the preferred meat option, but a lot of people just can’t afford it right now,” said Matt Dalgleish, co-founder of Episode 3.
On a per capita basis, chicken is the most-consumed meat in Australia, Dalgleish said, pointing out that it doesn’t suffer from the same religious prohibitions as pork and also benefits from perceived health benefits.
Inflation in Australia soared in the post-pandemic period, like much of the developed world, prompting the Reserve Bank to embark on a rapid policy tightening campaign that lifted the cash rate to a 12-year high of 4.35% in November. While consumer price gains have slowed from a late-2022 peak, they remain well above the RBA’s 2-3% target.
That prompted Governor Michele Bullock to warn last week that a further rate increase can’t be ruled out.
UBS Group AG Analyst Shaun Cousins, in a research note following a consumer survey for the final three months of 2023, said he expects listed grocers such as Woolworths Group Ltd. and other “beneficiaries of trade down” such as K-Mart to benefit in an environment of households reining in spending.
–With assistance from Georgina McKay.
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