Our primary product types are fresh chicken products, prepared chicken products
and value-added export chicken products. We sell our fresh chicken products
to the foodservice and retail markets. Our fresh chicken products consist of
refrigerated (nonfrozen) whole or cut-up chicken, either pre-marinated or non-marinated
and prepackaged case-ready chicken. Our case-ready chicken includes various
combinations of freshly refrigerated, whole chickens and chicken parts in trays,
bags or other consumer packs labeled and priced ready for the retail grocer’s
fresh meat counter. Our fresh chicken sales accounted for 69.8% of our total
U.S. chicken sales in 2015.
We also sell prepared chicken products, including portion-controlled breast
fillets, tenderloins and strips, delicatessen products, salads, formed nuggets
and patties and bone-in chicken parts.
Our primary customer markets consist of the foodservice and retail channels,
as well as selected export and other markets.
Our foodservice market principally consists of chain restaurants, food processors,
broad-line distributors and certain other institutions located throughout the
continental U.S. Within this market, we service frozen, fresh and corporate
accounts. Fresh and frozen chicken products are usually pre-cut to customer
specifications and are often marinated to enhance value and product differentiation.
Corporate accounts include further-processed and value-added products supplied
to select foodservice customers, improving their ability to manage product consistency
and quality in a cost efficient manner. We believe we are positioned to be the
primary or secondary supplier to national and international chain restaurants
who require multiple suppliers of chicken products. Additionally, we believe
we are well suited to be the sole supplier for many regional chain restaurants.
Regional chain restaurants often offer better margin opportunities and a growing
base of business. We believe that our full-line product capabilities, high-volume
production capacities, research and development expertise and extensive distribution
and marketing experience are competitive strengths compared to smaller and non-vertically
integrated producers. Foodservice growth is anticipated to continue, despite
the effects resulting from continued weak economic conditions in the U.S.
Our retail market consists primarily of grocery store chains, wholesale clubs
and other retail distributors. Our retail market products consist primarily
of branded, prepackaged cut-up and whole chicken and chicken parts. We concentrate
our efforts in this market on creating value for our customers through category
management and supporting key customers in expanding their private label sales
programs. Additionally, for many years, we have invested in both trade and retail
marketing designed to establish high levels of brand name awareness and consumer
preference. We utilize numerous advertising and marketing techniques to develop
and strengthen trade and consumer awareness and increase brand loyalty for consumer
products marketed under the Gold Kist®, County Post®, Pierce Chicken®,
Pilgrim’s Pride® and Pilgrim’s® brands. We believe our efforts
to achieve and maintain brand awareness and loyalty help to achieve greater
price premiums than would otherwise be the case in certain markets and support
and expand our product distribution. We actively seek to identify and address
consumer preferences by using sophisticated qualitative and quantitative consumer
research techniques in key geographic markets to discover and validate new product
ideas, packaging designs and methods.
Our export and other chicken market consists primarily of customers who purchase
for distribution in the U.S. or for export to Mexico, the Middle East, Asia,
countries within the CIS and other world markets. Our value-added export and
other chicken products, with the exception of our exported prepared chicken
products, consist of whole chickens and chicken parts sold in bulk, or value-added
form, either refrigerated or frozen. We believe that U.S. chicken exports will
continue to grow as worldwide demand increases for high-quality, low-cost meat
protein sources. We expect that worldwide demand for higher-margin prepared
food products will increase over the next several years and believe our strategy
of value-added export growth positions us to take advantage of this expected
demand.