Maple Leaf Foods’ new poultry plant in London, Ontario, is playing a pivotal role in shifting the company’s focus more toward retail customers and away from the industrial market. During the company’s second quarter earnings call on August 8, executives discussed the strategic changes that have led to increased profitability, despite a dip in overall sales.
Maple Leaf Foods President and CEO Curtis Frank highlighted the significant contributions of the London facility, which began operations in November 2022. Frank noted that while poultry sales were down by 3.9% compared to the same quarter in the previous year, this decline was anticipated. The reduction in sales to the industrial sector was part of a deliberate strategy to shift volumes from a co-manufacturer to the London plant, allowing the company to focus on higher-margin retail sales.
Chief Financial Officer David Smales further explained that the new plant has enhanced the company’s ability to increase tray pack capacity, effectively replacing lower-value and volatile industrial sales with more profitable retail products. This strategic move resulted in a year-over-year decline in poultry sales but improved the overall product mix and margins.
Retail sales for Maple Leaf Foods’ poultry products saw a nearly 13% increase during the quarter, a growth that Frank attributed to the resilience of the company’s leading brands, including Maple Leaf, Prime, and Mina Halal. Despite these gains, Frank acknowledged that demand for premium products, such as those raised without antibiotics (RWA) and organic poultry, remains soft. He attributed this softness to the broader economic environment, which has dampened consumer appetite for higher-priced offerings.
In summary, Maple Leaf Foods’ investment in the London poultry plant is proving successful in repositioning the company’s poultry business toward more profitable retail channels, even as it navigates challenges in the premium product segment.
