Inghams Lacks Sufficient Competitive Advantages to Warrant an Economic Moat

We forecast Inghams' top-line growth to be driven by population growth and some per-capita increases in chicken consumption, aided by process enhancements and further improvements in the feed conversion ratio for chicken. Despite Inghams' dominant market share and the industry's duopoly-like structure, competition in poultry is intense. Poultry is largely commoditized, and Inghams possesses limited opportunity to differentiate its products, leading to our view that the firm lacks a long-lasting competitive advantage required to award an economic moat. Further, Inghams' customer base is highly concentrated, with around 60% of sales coming from five customers, including supermarket giants Woolworths and Coles and quick-service restaurant KFC. In our view, the balance of power lies firmly with these key customers.