As the Thanksgiving holiday looms, it’s time to talk turkey.
In the past few years, the frozen turkey supply chain has seen it all — big birds, small birds, too many birds and not enough.
To find out more about the average turkey’s path from the farm to your plate, SOURCE talked with two Colorado State University supply chain experts, College of Business Associate Professor Zac Rogers and College of Agricultural Sciences economist Dawn Thilmany, who is also director of the Northwest and Rocky Mountain Regional Food Business Center and co-director of CSU’s Regional Economic Development Institute.
Bird flu had a big impact on eggs over the past year. Dawn, will we see it impacting the Thanksgiving table this year as well — both in terms of supply and cost?
Dawn Thilmany: This year, it‘s actually been far more problematic in the migratory bird flocks, and so noncommercial birds. So, we actually have seen supplies recover relative to last year, and that‘s translating to lower turkey prices this Thanksgiving. They still won‘t be what they were, what people might have considered “normal” pre-COVID. But they’re definitely significantly down compared to last year.
When the pandemic hit, consumers wanted smaller turkeys or maybe just parts rather than a whole turkey for their Thanksgiving meals because we weren’t gathering as much. Has that trend continued post-pandemic?
Thilmany: For the most part we’re returning to normal, and you’re seeing people look for the sizes that we had seen historically. But this is where it’s important to look at a bigger, longer-term trend, which is we just have smaller household sizes in the U.S. than we had, say, 25 years ago. So, we have people gathering again, but we have smaller households than we did 25 years ago.
So, you still see there’s a lot of interest in smaller turkeys because of convenience and people not wanting to have the four-hour cook times. We still have seen relatively higher demand for parts like turkey breasts, particularly. A lot of people just want to buy a smoked turkey breast. And so that’s a trend we’re seeing in the longer term that was less to do with more recent events, but something that’s just been a mega trend as we start to see smaller households in the U.S.
While turkey prices might be down, the cost of everything else seems to be up substantially.
Thilmany: We’ve seen price inflation slow down. But there’s a difference between slowing down price inflation and prices going back to what people thought and hoped would be normal prices again. And so, we’re just going to probably see a larger grocery bill for those meals again this year.
People are adjusting in various ways. We definitely see people thinking about how they maybe aren’t going to have as ample of leftovers, maybe they do just get a turkey breast instead of a (whole) turkey. They might get chickens instead of turkey. They might again have smaller gatherings, and that’s because we have smaller households.
But we’re also really seeing a return in away-from-home eating and people embracing going out to restaurants and stuff again, and people having the travel bug. So, what I’m really kind of keeping my eye on is if we actually see more people eating out and traveling, which when you’re traveling, unless it’s to family, eating out at the places you travel to. So that’s the other trend I’m kind of watching this year, just to see if people who’ve had so much pent-up demand for travel and socialization that we see it kind of spur that kind of energy. All statistics are the travel numbers are just going crazy. Sometimes that’s to family, sometimes that’s not to family. And so, it’ll be interesting to also see if we just see restaurants see more of the demand this year.
That’s interesting because it used to be almost impossible to find a restaurant that was open on Thanksgiving.
Thilmany: We’re actually seeing more restaurants embrace being open just because there’s people who don’t want to cook that big meal at home, and with more women working away from home, they want to have a holiday, too.
So, Zac, how does the Thanksgiving holiday season impact the turkey supply chain? Because really, when else are people buying frozen turkeys?
Rogers: Well, your turkey may not be as farm fresh as you hope it could be. There’s a large distribution center for a big grocery chain in Denver, and I and a couple other supply chain professors toured it a few summers ago. They have one room at this giant distribution center that’s kept at –20 degrees, and it’s just for turkeys. That’s all that’s in there — tens of thousands of turkeys.
And I asked them the same thing: How exactly does this work? Because this is August. And I can see this room is packed with turkeys already. They said all the turkeys are sold in November and December. In January, everything that hasn’t sold gets put on sale or chopped up for lunchmeat. Then they turn up the temperature in that room from -20 degrees to 50 degrees, and they spend a month cleaning it because after having tens of thousands of turkeys in it, it probably needs a good scrub.
They start building up the inventory for Thanksgiving turkeys in February, and they build it up over the year. If you think about how many turkeys are going to be bought the week of Thanksgiving, it’s millions of turkeys. You can’t slaughter and prep and have a million turkeys in a month. It takes all year, basically. And so, the turkeys start building up in February, and they’re designed to culminate basically in November. And then we have the wind down and we start the cycle over again. Thanksgiving is the turkey supply chain.
What about other holiday staple food items that are heavily tied to the season, like cranberries?
Rogers: These companies are designed for seasonality. They spend the year building up to these peaks. And the way they do that is with a lot of flexible space. You build up capacity when you need it, and then when you don’t, you go back down. You see a lot of these sorts of sharing and expansion models in warehousing and in trucking where they build up the supply chains slowly to peak. When peak is over, you contract the space out.
Most supply chains are seasonal. Not toilet paper, not bread, not, you know, things like that, but almost everything else there’s some seasonality components. And they can kind of work out well. You know, if you sell skis and I sell beach towels, we have very different and opposite seasonalities. And today there’s a lot of apps that are sort of like Airbnb but for warehouses. So there’s a lot of thought and planning that goes into seasonality. The nice thing is if it’s something like Thanksgiving turkeys or Halloween candy, I can tell you with a lot of certainty right now, Halloween next year is going to be on Oct. 31st again. It’s very predictable.
Now what about the day AFTER Thanksgiving and all those Black Friday sales? Should consumers be expecting any supply chain snarls, especially as shoppers move more to online shopping?
Rogers: I would expect supply chains to run fairly smoothly this year in terms of deliveries. Ocean freight has a lot of extra capacity right now. They have too extra much capacity, actually, Maersk just laid off 10,000 people because of it. We have a lot of extra trucking capacity. So, things will be able to move quickly.
And it’s interesting, you know, every month we put out a report called the Logistics Managers Index. Our October report, which just came out on the first Tuesday of November, says that smaller companies have suddenly really built inventories up. And smaller companies are usually really slow to build inventories up. We would expect them to have started doing it earlier. But I think everyone was so burned by having too much inventory last year, they were kind of cautious. But now they all did it at the last second, and what that tells you is they’re now able to operate in a “just-in-time” fashion.
For 20 years, the gospel of supply chains was just-in-time inventory; get things right before you need it. It was the equivalent of stop at the grocery store on your way home every night to get what you need for dinner tonight; we’ll deal with tomorrow, tomorrow. During the pandemic, they had to go to more of a Costco approach — just get a whole bunch of it and we’ll use it as we go because supply chains were so unreliable, because there was too much volume going through there. Now the volume has gone back into equilibrium. We’re still busy; supply chains are just not as busy as we had been. And so, things are moving more easily. So that’s good, things will be delivered faster. That being said, we’re back at just-in-time. and just-in-time means that we don’t carry a lot of extra inventory.
And so, I don’t really know what the hot toy is going to be. I know last year it was Squishmallows was the thing. It was like a big sort of horrifying pillow. And so those could still sell out because we’re at “just-in-time.” But it won’t be like holiday of ’20 or ’21 when there was nothing on the shelves. Basically, what’s happened over the last year-and-a-half is we’ve kind of moved back towards normal. And so, the sort of wild swings that we’ve had for the last three years should mostly be pressed out of the system, and it should just be like a normal-ish holiday shopping season.
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