Bird Flu Outbreak Could Cause Rotisserie Chicken Shortage at Costco
Over the course of the past month, between 17 and 20 million turkeys and chickens in the U.S. have been infected with the highly pathogenic avian influenza (HPAI), or bird flu, and that could affect the supply of the most popular retail item at one of the country’s biggest wholesale stores.
Costco’s wildly popular rotisserie chicken is the epitome of a “low budget/high quality” consumer favorite. The megastore sources an estimated 400 million chickens a year and sells over 106 million of its Kirkland Signature broilers every year.
Costco had to kill over 500,000 chickens at its Nebraska facilities last month to try to stop the spread of the avian flu virus. Throughout the U.S. and at Costco’s grow farms, infections have not shown any indication of slowing down and even if they can be contained, operations won’t ramp up immediately as quarantined farms won’t be able to restock with new birds until it is completely safe to do so.
There is also serious cause for concern among non-Costco-associated farms surrounding the 6-mile-radiused quarantine area at Costco’s highly concentrated and confined farm facilities in Fremont, NE.
“The outbreak is in Costco-sponsored chicken houses, but the consequences of this outbreak will lead to a lot of economic pain for all the farmers involved, including those that have nothing to do with Costco,” farmer Yolanda Bailey of Fox Run Farms in Brainard, NE, told Forbes.
As a mega-corporation, Costco should be able to weather this supply storm and, if it comes to it, keep its rotisserie chicken shelves empty while it redirects consumers to other choices in its stores. However, the 6-lb. broilers have become emblematic to the company’s brand and unquestionably tied to customers’ experiences of shopping at Costco. Despite its significant health deficits and questionable growing and safety practices, chicken eaters flock to Costco specifically for this delicious, popular and convenient food option — which also happens to be incredibly cheap.
Kirkland Signature budget-friendly birds sell for $4.99 and have done so since 2009. Keeping the cost at $4.99 and not matching competitors’ prices means losing out on millions but keeping a huge market share. This bird flu outbreak could threaten this price plateau and force Costco’s hand to finally increase its store cost.
Since 2019, Costco has been producing chickens at its $450 million poultry complex in Fremont, controlling production of its top seller from farm to store. The facilities are firsts-of-its-kind, enabling Costco to seize control of its chicken supply chain by essentially making it its own meat supplier.
About a quarter of Costco’s supply, or roughly 100 million chickens, come from these contracted growers in Nebraska. Costco picked Nebraska for this plant because the area had the three biggest costs involved with chicken production available: grain, water and labor.
This is only the second major outbreak of HPAI in the U.S. and the first in seven years. The last major outbreak in 2015 cost the poultry industry more than $1.5 billion and caused egg prices to double. That outbreak resulted in the destruction of approximately 12% of the U.S. laying hen population.
This current bird flu strain, Eurasian H5N1, is considered highly pathogenic but it is hoped that continued biosecurity and improved mitigation measures among commercial producers not in place in 2015 will curtail the current outbreak and have a less severe supply disruption for the poultry industry, for Costco’s rotisserie chicken stock and for its dedicated customers.
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