* Chicken wings are industry's No. 2 seller
* Prices go higher as supplies decline
* September chicken production down 8 pct vs year ago
By Robert Burgdorfer
CHICAGO, Nov. 2 Chicken wings, those heavily
seasoned tidbits served in sports bars and at-home football
parties, are giving the chicken industry a lot to crow about as
sales have largely weathered a recession and a doubling of
In addition, industry forecasters predict continued strong
demand as sports fans will nosh on wings at sports bars from now
through the National Football League's 2013 Super Bowl in
February and college basketball's March Madness.
Pilgrim's Pride Corp, the No. 2 U.S. chicken
producer, last week reported a better-than-expected quarterly
profit, in part because of the nearly $1 per lb increase in wing
prices versus a year earlier. Breast meat, the industry's top
revenue producer, only increased 20 cents.
Tyson Foods Inc, the No. 1 chicken producer, will
report earnings later this month and Sanderson Farms Inc
, the No. 4 producer, will report in December. Tyson
produces beef, pork, and chicken, while Sanderson is strictly
chicken. Analysts expect both to post better-than-year ago
Privately held Perdue Farms is the No. 3 producer.
FEWER WINGS, HIGHER PRICES
The main reason for higher prices is there are fewer wings
and other chicken products, because high feed prices have forced
the industry to reduce production.
There were will be fewer wings and higher prices in 2013 as
well as the chicken industry is expected to trim production some
more. Pilgrim's Pride told analysts after its earnings that U.S.
chicken production in 2013 should be down 2 to 3 percent from
While wing prices are due to go higher in coming months and
there will be fewer of them, analysts doubt demand will greatly
suffer at restaurants and bars.
"Wings are relatively inelastic. People want to eat them,
they are not so concerned about price," said Paul Aho, an
economist with the consulting firm Poultry Perspective.
Also, wings are fairly inexpensive when compared with beef,
pork and chicken breast meat. That has kept demand strong
despite the recession and high gasoline prices.
"Even if you lost your job, lost your house, I still think
you would still want a beer and wings," said Aho.
WINGS ARE NO. 2 SELLER
Ever since the Anchor Bar in Buffalo, New York, served up a
batch of spicy wings in 1964 to launch this food craze, demand
has escalated, gradually at first and then booming in the 1990s
Once an industry byproduct, wings are now the chicken
industry's No. 2 seller behind breast meat. They account for 25
percent of the industry's revenue, versus 17 percent eight years
ago. Breast meat is 37 percent, down from 53 percent eight years
The latest surge in wing prices is largely due to fewer of
them, as the chicken industry has cut production to save on feed
"It is all supply driven, demand (for wings) has remained
surprisingly good," Mike Cockrell, Sanderson Farms' chief
financial officer, said of the higher wing prices.
Sanderson Farms said it is operating at 94 percent of
capacity and will probably stay there until conditions improve.
Feed, which is primarily corn and soybean meal, is the
largest cost of production and prices have soared to record
highs this year as the worst drought in half a century shrunk
U.S. crops. Corn topped $8.40 a bushel and soybean meal
surpassed $550 per ton. A year earlier, corn was $7.50 and
soymeal about $380
"The full brunt of this high-priced grain will hit us in
October, November and December," said Mike Cockrell, chief
financial officer at Sanderson Farms. "From what we hear,
everybody has cut back."
U.S. chicken production in September was down 12 percent
from August and down 8 percent from a year earlier, according to
the U.S. Agriculture Department.
HIGHER PRICES BITE INTO PROFITS
Buffalo Wild Wings, one of the largest wing-serving
restaurant chains in the country selling 21 million a week, on
Tuesday reported a 25 percent increase in revenue for the
quarter ended in late September, but its profit shrunk as the
wings it buys from chicken companies cost more.
Wings, on average cost the company $1.97 per lb during that
quarter, a 70 percent increase from a year earlier. Since then,
the cost has increased to $2.07, it said during a conference
call with analysts.
To adjust, the company said it has raised prices on wings
and is considering flexible serving sizes rather than fixed
At a Chicago Buffalo Wild Wings restaurant, a serving of six
now costs $5.99, up about $1.50 from four months ago, said
manager Brian Ruth.
"Wings are definitely the top seller," said Ruth.
The price increase has not slowed sales during weekend
football games, but there has been some push back during Tuesday
specials, when wings went to 60 cents from 45 cents in just a
"People stopped coming in on those days," he said.