Yum China, KFC hit by rising poultry prices in China amid African swine fever epidemic
- The average wholesale price of chicken in big cities rose by more than 33 per cent in October
- Impact of rising chicken prices on Yum China has been ‘significant,’ says executive
“Poultry price has gone up because of African swine fever and the substitution away from pork to chicken. So the cost has gone up,” said Fred Hu, founder of Beijing-based global investment firm Primavera Capital Group, and non-executive chairman of Yum China.
The impact on the company that buys a billion chickens a year in China has been significant and “has definitely put up the pressures,” said Hu. He did not say how much the price hike had cost Yum China, which also runs China’s Pizza Hut.
In 2016, the brand spun off from global business Yum Brands and listed on the New York Stock Exchange. It was backed by Hu’s Primavera Capital Group, who invested US$410 million, and fintech company Ant Financial Services Group, who put in US$50 million. (Ant Financial’s parent company, Alibaba, owns the South China Morning Post.)
An epidemic of African swine fever has cut China’s pigs by more than a third over the past year, making pork prices surge and forcing customers to migrate to other meat options. According to the Ministry of Agriculture, the average wholesale price of chicken in big cities rose by more than 33 per cent in October from a year earlier.