Sales of chicken wings have largely weathered a recession and a doubling of prices, and industry forecasters predict continued strong demand as sports fans from now through the National Football League’s 2013 Super Bowl in February and college basketball’s March Madness continue to drive demand for wings, according to a Reuters report. Wing prices have increased nearly $1 per pound versus a year earlier, while breast meat only increased 20 cents. Wings are now the chicken industry’s number two seller behind breast meat.
Higher prices for chicken wings and other chicken products are largely because there are fewer wings to sell as the industry has cut production to save on high feed costs. U.S. chicken production in September was down 12 percent from August and down 8 percent from a year earlier, according to USDA. Feed prices have soared to record highs this year as the worst drought in half a century shrunk U.S. crops, while corn is being used to produce ethanol. Corn topped $8.40 a bushel and soybean meal surpassed $550 per ton. A year earlier, corn was $7.50 and soymeal about $380.
While wing prices are expected to increase in coming months, 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 Poultry Perspectives. In addition, wings are relatively inexpensive when compared with beef, pork, and chicken breast meat. This 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,” Aho said.
Higher wing prices are cutting into profits at wing restaurant chains. Buffalo Wild Wings on Tuesday reported a 25 percent increase in revenue for the quarter ending in late September, but its profits shrunk as the wings it buys cost more. Wings on average cost the company $1.97 per pound 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 this week. To adjust, the company said it has raised prices on wings and is considering flexible serving sizes rather than fixed quantities.
