Wednesday, November 29, 2023

How a chicken defeated pigs and cows in Ukraine

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Pavel Kuliuk, ARR.News
Pavel Kuliuk, ARR.News
My name is Kulyuk Pavel Valerievich. Born in 1977 in the Russian Urals, but have lived all my life in European Ukraine. I graduated from secondary school No. 30 in the city of Lisichansk, Luhansk region. Then I studied at the International Institute of Business Management and Law in the city of Slavyansk, Donetsk region. I started my career as a grocery wholesaler. Then I started working as a marketer in a publishing house. I have been a journalist since 2007. The globalisation of the economy is the driver of my career growth. Being a journalist has become a way of life. Each reportage is a kind of journey to some topic and country. Heterosexual, in a civil marriage, no children. I love gardening and sports. I prefer a cosy home to beautiful travels. With respect and sincerity, Pavel.

Ukrainian chicken producers have made a good marketing move.
Thanks to this, the retail price of boneless chicken meat is about US$3 for one kilo.
This is the most affordable meat in Ukraine.
Beef and pork producers have yet to strike back.

Because of the war, Ukrainian businessmen are in a difficult situation.1 However, entrepreneurs are trying to improve this. One of the most effective solutions was the invention of a new type of product. Chicken producers have developed a new way to process chicken carcasses. This made it possible to obtain the cheapest boneless meat in the country. We are talking about the so-called “Leg meat”.

This is a whole piece of meat that is obtained after removing the bone from a chicken leg. This meat has skin, tendons and fat. This distinguishes this meat from the well-known chicken fillet. The “Leg meat” is not as dry as the fillet due to the skin, tendons and fat. But also this meat is almost 30 per cent cheaper than fillet. “Leg meat” is the cheapest boneless meat in Ukraine.* Prices are shown in the table.

Meat without bonesRetail price for 2.2 pounds (1 kg)
Chicken filletUS$4.36
Leg meatUS$3.27

*At the rate of the 36.69 hryvnia per 1 US dollar

As we can see, the price for 2.2 pounds/ one kilo of “Leg meat” is US$1.09 less than chicken fillet. “Leg meat” per kilo costs US$1.90 less than beef, which is the most  expensive meat in the country. For Ukraine, where the cost of living is only US$70.5,2 this is a very large value. Thanks to new technologies, the Ukrainian population have the opportunity to buy cheap and tasty chicken meat.**

But this is not only a benefit for buyers. Chicken manufacturers have invented a new product for their own benefit. “Leg meat” is the result of processing  chicken legs. The price of 2.2 pounds (1 kg) of chicken legs is US$2. Chicken legs and wings are in the least demand among the citizens of Ukraine.3

By turning the leg into “Leg meat”, businessmen get rid of an unpopular product and get the most popular and most affordable meat in the domestic market. This product has proven to be so popular that there is a shortage. Demand greatly exceeds supply. There are also attempts to fake “Leg meat” when sellers under the guise of this product are trying to sell “Chicken goulash”. This meat has the worst taste and does not look very presentable.

The new product improves the prospects for meat exports. Ukraine is in 8th place in the world in terms of chicken meat exports. More than 430,000 tons of chicken are sold abroad annually.4 The average price of chicken exported by Ukraine is US$1.47 per 2.2 pounds(1 kg).5 Most exports are whole chicken carcasses or fillets. “Leg meat” allows sellers to expand the export range. It is quite possible that this product will become a competitor to more expensive  fillets.

Such a different chicken

The novelty did not appear by chance. Different parts of the chicken show different price dynamics. Some parts of a chicken can rise in price by almost 50 per cent per year. At the same time, other parts of the chicken stay almost the same. This greatly affects the profitability of the business. The invention of a new product allows businessmen to compensate for the disproportion in prices and increase profitability.

“Leg meat” is made from chicken leg. This is an underdog in terms of price increases. But it is the leader in terms of selling price. This part of the chicken is so expensive that it almost cannot rise in price any more. Under the current conditions, the processing of chicken leg into “Leg meat” allows businessmen to increase profits. Here’s how different parts of the chicken went up in price in 2021:

  • Chicken liver – 51 per cent;
  • Chicken fillet – 18 per cent;
  • Chicken wings – 12 per cent;
  • Whole chicken – 3 per cent;
  • Chicken leg – 2 per cent.6

At the same time, chicken legs are third in terms of selling price. Fillet and whole chicken are more expensive. Having processed the chicken leg, businessmen receive “Leg meat” which is more expensive than a whole chicken but cheaper than a fillet. Before processing, chicken leg, like other parts of the chicken, is characterised by a profitability of 13 -26 per cent.7 However, the production of “Leg meat” allows you to increase this figure up to 50 per cent! ***

This is an example of how chicken processing can increase profits.

Private entrepreneur Lyudmila Koloshko speaks about how profitable it is to sell “Leg meat”.

What do you think about the new “Leg meat”?

Lyudmila Koloshko: This is not new. “Leg meat” appeared on the market for the first time in 2021. However, this meat did not become popular then.

Why wasn’t “Leg meat” popular in the beginning?

Lyudmila Koloshko: The price of “Leg meat” was not competitive. Beef and pork on the market were sold at more attractive prices than “Leg meat”. People who wanted meat bought beef or pork. People who wanted to save money bought different parts of the chicken where there are bones. It cost less. That’s why “Leg meat” was not a bargain. Most people didn’t know what “Leg meat” was.

Why has the situation changed now?

Lyudmila Koloshko: It’s all about the war. Prices have changed. Beef and pork have risen in price by almost half. This meat has become more expensive than “Leg meat”.  The price of different parts of the chicken also went up. Whole chicken is now only 18 per cent cheaper than “Leg meat”. But who wants to buy such meat with bones? After all, meat without bones costs a little more. Now people who want to save money buy “Leg meat”. This is the best value for money. Everything else is  either worse or much more expensive. Now the “Leg meat” trade is going very well.

What is the wholesale price for “Leg Meat”? If there are discounts or other conditions for wholesale sales?

Lyudmila Koloshko: None of the retailers will talk about the wholesale price.**** There are no discounts or any bonuses on “Leg meat”. This is a popular item. For others types of meat it is possible to get a discount or deferred payment.

What is the retail price for “Leg meat”?

Lyudmila Koloshko: A month ago, “Leg meat” cost 117-120 hryvnia per kg. (US$3.1-$3.2 for 2.2 pounds)*****. Then there were supply disruptions. There was no product for a couple of weeks. After this price increased to 125 hryvnia per kg. (US$3.4 for 2.2 pounds).

How much “Leg meat” is purchased in a city with a population of 100 thousand people?

Lyudmila Koloshko:I do not know exactly. But I think it’s two big trucks. This is about 36 tons per month.


“Leg meat” is a very successful marketing solution.

By entering the market, this product not only makes life easier for Ukrainian citizens and businessmen; the production of this product strengthens the chicken farming industry.

Poultry meat will continue to dominate the total consumption of all types of meat. In 2022, the average meat consumption was 112 pounds (52 kg) per Ukrainian. Half of this volume was of poultry meat, mostly chicken meat, 37 per cent pork and 13 per cent beef.8

By entering the market, “Leg meat” will keep chicken meat in the leading position. Ukrainians will buy even more chicken. After all, this meat is cheaper than beef or pork. So far, pork and beef companies have not found an effective response to the actions of competitors.

And this means that Ukrainian chickens are still flying.

*Market prices in the city of Kramatorsk, Donetsk region. According to the author.
** Previously, “Chicken goulash” was sold on the market. However, this product is worse in quality than “leg meat”. The price of “chicken goulash” and “leg meat” is the same.
*** The statement is true for vertically integrated large agricultural holdings. These companies have a full cycle of production and sales. From growing chicken feed to retail stores selling chicken meat.
****Another anonymous source reported that the wholesale price of “Leg meat” is two times less than the retail price. That is, the markup is 100 per cent.
*****At the official dollar exchange rate 36.73 hryvnias per 1 US dollar




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