Sizing the Meat Protein Marketplace - Is Beef Driving Retail Gains?
While the rate of inflation continues to slow, prices remain higher than pre-pandemic levels, tempering consumer spending. As a result, consumers often look for cost-saving measures in their food purchases and dine out less frequently.
NOVEMBER 2024
1. How have inflation and higher retail beef prices impacted domestic consumer demand this year? NCBA’s market research team, a contractor of The Beef Checkoff, reviewed 2024 year-to-date primary and secondary marketplace data showing consumer demand remains strong across the primary animal proteins and even more so for beef, in spite of economic headwinds.
While the rate of inflation continues to slow, prices remain higher than pre-pandemic levels, tempering consumer spending. As a result, consumers often look for cost-saving measures in their food purchases and dine out less frequently. Year-to-date beef prices through October 6th, 2024, averaged $6.64/lb. at retail, up 5.3% from a year ago. Over the same time period, chicken prices increased 0.4% and pork prices increased 3.0%, providing those proteins a price advantage. Nonetheless, consumption and demand for beef remains robust, as indicated by consumer-reported consumption and strong retail sales data. As shown in the chart below, a large majority of consumers eat beef (72%) and chicken (84%) at least once per week, with those numbers up slightly compared with previous years. While consumers continuously perceive beef to be second to chicken in terms of value for the money, beef leads in taste, eating experience, and versatility, driving its demand and affecting consumption and preference.
Further, the total value of fresh beef sales year-to-date at retail is up 9.3%, due in part to inflationary pressure as well as declines in beef availability, while total pounds of beef sold is showing gains of 3.8%--another indication that beef demand is holding incredibly strong. The market is also seeing moderate gains in chicken sales (both in dollars and pounds) while pork is up 3.7% in dollars and up just 0.6% in volume. Meat alternatives continue to see double-digit declines in both value and volume.
2. Has the marketplace for beef changed since USDA's initial guidance of lower per capita consumption in February of 2024?
Trends have reversed since the February 2024 data were released, with demand actually very strong. Total pounds of beef sold have improved with total dollar sales increasing at an even faster rate (as discussed above). Additionally, as fresh protein sales have increased across the board so far in 2024, beef maintains more than 50% of the total sales value (56% actually).
3. With many consumers cutting back expenditures on food and other items, were reductions in beef purchases expected?
In the second half of 2023 and heading into 2024, some reductions in consumption were expected due, in part, to tighter beef supplies resulting from drought-induced liquidation and contraction of the cattle herd. However, the situation with the beef supply has changed with supplies increasing since early 2024 and now actually projected to exceed 2023 numbers. Although there are still fewer head of cattle in the pipeline available for domestic supply (rebuilding of the herd is not taking place rapidly), the current increase in beef availability can be attributed, in part, to an increase in beef imports, heavier cattle weights/yields, domestic cattle staying on feed longer, and, added to the mix, an increase in beef on dairy. Projections for 2025 are also stronger than previously estimated but will remain the softest since 2016 and below the current supply. This is due primarily to the slow pace of rebuilding the herd and weaker anticipated imports.
4. Which beef cuts have been impacted the most by higher retail prices? Ground beef sales have been one of the bigger growth areas.
Ground beef value has risen by 9.8% while pounds sold are up 3.5%. Steak value has increased by 9.0% while pounds sold are up 4.1% compared to last year’s levels. Additionally, other cuts including roasts, briskets and value-added products are all showing gains in total value and pounds sold compared to year-ago levels. Fresh ground beef makes up almost half of beef sales in volume at the retail meat case (48%) and 36% of dollar sales. Steaks also account for more than one-third of dollar sales (37%) but nearly one-quarter of beef volume (24%).
Consumers have also been moving to chicken, as discussed above, with both dollar sales and pounds up in 2024. Based on the research, consumers say they plan to purchase more chicken and ground beef, and less of the more expensive steak cuts.
5. What else are consumers doing to find value and some relief from higher food prices?
More than a quarter of consumers say they will be:
- Looking for deals and using coupons more often (37%)
- Dining out less (36%)
- Finding more ways to use leftovers (28%) --> Which caters to that value and versatility demand driver component; and our focus on recipe development at beefitswhatsfordinner.com and what you can do with leftovers
- Stocking up/freezing items more often (27%)
Other tactics some consumers are considering include moving to store/private label brands, shopping at different stores than they normally would (mass merchandisers - Walmart in particular - have been successful moving market share), searching for new recipes for both beef & chicken, and buying different cuts of beef to prepare at home (again, an area of focus at beefitswhatsfordinner.com for recipe inspiration).
6. How have Beef Checkoff dollars helped prevent reductions in beef demand?
Various promotions and consumer engagement activities including Back to School focus on beef as a healthy meal
- Various promotions and consumer engagement activities including Back to School focus on beef as a healthy meal. See Easy Meals for Back-to-School Season and Nourishing Back-to-School Beef Recipes.
- Boosting Beef. It’s What’s for Dinner. Awareness and new brand anthem campaign.
- Influencer engagement.
- New partnership with Little League World Series See Little League.
- Channel marketing activities/promotions with grocery stores, retailers, and food service.
- Recipe development/inspiration on beefitswhatsfordinner.com to showcase how to prepare alternative/less expensive cuts of beef and how to do more with leftovers. Convenience and versatility emphasis - see Recipes.
- Highlighting beef nutritional value as a high-quality protein with 10 essential nutrients; early years campaign, adolescent benefits, and work with physicians See Nutrition.
- Raised & Grown activities and highlighting the trust consumers have in beef farmers and ranchers (as opposed to other protein farmers) See Raising Beef.
7. Are there additional comments on how Beef Checkoff dollars continue to help boost overall consumer demand?
Despite the challenges both consumers and producers have experienced in recent years, retail beef sales remain strong to this point in 2024. This is a solid indicator that beef demand has remained very robust. The question is will that hold as we head into 2025 with more pronounced tighter supplies expected.