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Recession Consumer Chickens Out of Beef

04 March 2009

CHINA - Meat-eaters are "trading down" from beef and pork in favour of chicken as consumers pare their food costs, according to the chairman of grocery chain Safeway Inc and analysts at Deutsche Bank AG.

The switch will squeeze beef and pork producers, while chicken sellers may gain from the quest for "cheaper protein", Deutsche Bank said in its "Monthly Mouthful" report. Still, poultry prices face pressure as rising protectionism and global recession make global trade more competitive, the report said.

"We're seeing more shifts in the meat category to cheaper meats - ground beef and chicken - than we saw earlier in the year," said Safeway Chairman Steven Burd. There is "trading down virtually across the board" in retail and even "on-retail products", he said during the Pleasanton, California-based company's earnings teleconference on 26 February.

"Diminishing demand for hogs and cattle have led to ample market-ready animal supplies, despite liquidation efforts," Deutsche Bank analysts including Christina McGlone wrote in the 24 February report.

In addition to lower demand for beef, the slaughter of dairy cows is set to increase in 2009, as farmers look to cut costs.

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