Chicken is an affordable (but still tasty) alternative to red meats. And without the skin, the fat content is normally lower. Non-organic chicken is a staple of the middle class, and it can be used as a gauge of consumer strength (of course, combined with other indicators).
Here’s what’s interesting…
Even though regular chicken is facing downward pressure on prices, Chipotle (CMG:NYSE) said it was experiencing a major shortage of “natural” chicken. Is this good news for Tyson? Not so fast!
Natural chicken supposedly falls right between regular chicken and fully organic chicken. It’s slightly higher in price than regular farm chicken and contains no additives or antibiotics.
What’s “unnatural” about “natural” chicken is that the FDA does not set any guidelines for what that word means in the real world. The USDA states that it’s a product containing no artificial ingredients or added color and is only minimally processed.
The bottom line is that it costs more than regular chicken. Truly organic chicken costs even more.
I bring this up because Tyson is struggling with lower demand and lower chicken prices; yet there is a shortage of natural, high-end chicken. This tells me that growth is in the upper class, not with the common folks. High-priced, organic grocers like Whole Foods Market (WFM:NASDAQ) are making record profits, which again points to a very healthy upper class.
Chicken production is a tough business to be in, but tracking demand and prices can speak volumes about the health of the consumer.
I believe we can expect the top-shelf products to stay in demand.
As for our friend the chicken, I would stay away from Tyson Foods for now and stick with high-end resellers like Whole Foods and the natural, organic food distributors like.
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