Chicken Not So Recession-Proof This Time

On the first day of this month, I noted that Robert Feldman, Morgan Stanley's chief economist was predicting "massive shift to chicken" as people sought alternatives to pricier pork and beef.

If that's happening, though, it's not helping U.S.-based chicken processors much. Tyson Foods, in particular, is hurting â€" its third-quarter earnings report, issued Monday, indicated that profits had fallen 92 percent in a year. Pilgrim's Pride, meanwhile, on Tuesday announced a third-quarter loss of $52.8 million, though that was still better than stock analysts had expected.

Supposedly "recession proof," chicken is nonetheless vulnerable to price spikes in energy and grains â€" though not so vulnerable in the latter case as are beef and pork. How "recession proof" something is depends on the recession. If prices aren't soaring as they are now, chicken can be more than recession proof â€" usually, it's a sure winner.

But as the Wall Street Journal's Marketbeat blog pointed out on Monday, consumers not only trade down from beef and pork to chicken, but trade further down within the product category â€" for example, from deboned fillets to bone-in chicken.

And, the blog's David Gaffen notes, the industry -- Tyson and Pilgrim's Pride very much included -- has been moving away from bone-in chicken toward the more premium deboned products. And that has only exacerbated the problem.