August 19, 2022
“Summertime is always the best of what might be.” – Charles Bowden
With warmer weather and longer days comes one of the most anticipated portions of the year: summertime. Defined as the period between Memorial Day and Labor Day, summertime grilling season is currently in full swing. Despite what has been considered a period of mass uncertainty amid volatile market conditions, consumers are still appearing eager to enjoy social activity and occasions to fire up their backyard barbecues. According to a Beef Checkoff funded survey (Figure 1), consumers are planning on grilling 10 times per month this summer, up 0.8 occasions (8.3%) compared to last year1. Amongst the various summertime holidays, 65% of respondents claimed they were likely to grill on the 4th of July holiday, with Labor Day and Memorial Day close behind at 57% and 53%, respectively.1
Figure 1. Consumer Grilling Preferences: “For each of the following holidays, please select how likely your household is to grill:” (T2B); “How many times a month would you say your household is planning to grill this summer?”2
Additionally, beef still has a high level of rapport with consumers when compared to other protein sources. According to the Consumer Beef Tracker survey, 54% of consumers ranked beef as their number one protein choice for social gatherings during Q2-2022 (April – June). This finding is 20 percentage points higher than the ranking for chicken during the same timeframe2. Figure 3 shows that consumers have consistently ranked beef as their number one choice for social gatherings since Q3-2018 (this is the entire period for the Consumer Beef Tracker dataset). As social gatherings have been on the rise since the pandemic, beef being highly ranked in social gatherings may translate into favorability with consumer purchasing decisions.
Figure 2. Consumer Perceptions for Beef - Social Gatherings: “For the statement shown, please rate each protein based on your experiences. You can rate each protein anywhere from Agree Completely to Disagree Completely.”2
Beef was also seen as a diverse protein source that can be suitable for many types of meals, an especially important factor during the summer grilling season. Figure 3 highlights the fact that 47% of respondents ranked beef as number one for diversity in types of meals during Q2-2022, a 7-percentage point increase over chicken2. Combining this information with the fact that consumers are planning on increasing their instances of grilling this summer (Figure 1), retail beef sales may benefit as consumers experiment with different beef related recipes.
Figure 3. Consumer Perceptions on Beef – Versatility: “For the statement shown, please rate each protein based on your experiences. You can rate each protein anywhere from Agree Completely to Disagree Completely.”2
The 15 weeks (Memorial Day – Labor Day) that constitute the summer grilling season has historically accounted for 30% of all retail beef sales on average since 2020. For the 2021 summer grilling season, $9.42 billion worth of sales (30.1% of yearly sales) on 1.6 billion pounds (29.0% of yearly sales) of beef occurred during this timeframe3. Currently, the 2022 summer grilling season has been competitive when compared to previous retail sales. Between the weeks of 05/28/2022 – 07/16/2022, $4.56 billion (about $14 per person in the US) worth of beef products have been sold through retail outlets, which is 2.0% higher than the $4.47 billion worth of beef sales that occurred during the same period in 20214. However, these 2022 trends are currently trading around 1.3% lower than 2020 levels for the same period, as retail beef sales for 2020 during these weeks accounted for $4.62 billion4,5.
Figure 4. 2021 and 2022 Weekly Beef Retail Sales3,4
Increased quantity demanded during the summertime months has historically led to increased retail sales of popular proteins, namely beef, chicken, and pork products. Figure 4 shows beef retail sales for the 2021 and 2022 calendar years, with a zoomed-in section highlighting the summer grilling season months. Retail sales began increasing around the end of May, in potential preparation for Memorial Day festivities. Beef demand continued to stay strong throughout June as the 4th of July holiday approached (both for 2021 and 2022)3,4. Following July 2021, retail sales dropped during the holiday-less month of August, before going on a final run as Labor Day approached3.
While 2022 retail sales are currently outpacing 2021 sales, pounds sold shares a different angle. Currently, 757.5 million pounds of beef have been sold from 05/28/2022 – 07/16/20223. This figure is 1.4% lower than the 767.9 million pounds of beef sold within the same period in 20213,4. The fact that dollar retail sales are increased compared to 2021, while pounds of beef sold have decreased could indicate that consumers have been purchasing less pounds of beef but have been spending more on those pounds. This could be related to the various supply chain and inflationary pressures currently affecting food prices in most retail markets.
Figure 5. Retail Sales for First Half of Summer Grilling Season3,4,5
While pounds sold have been lower decreasing since the 2020 first half of the summer grilling season, figure 5 shows that retail sales took a dip from 2020 – 2021, but have since increased, although they have not yet fully reached 2020 levels. $2.55 billion (433 million pounds) of beef products were sold within a four-week period ending 07/17/20213. This quantity sold amounts to around 8.2% (7.9%)* of the $31.05 billion (1.60 billion pounds) of beef sold within the 2021 calendar year. Upwards of $2.62 billion (435.1 million pounds) of beef products were sold during a similar four-week period ending on 07/16/2022, a 2.6% (0.40%) increase over 20213,4. Pounds of beef and dollars sold have both increased from 2021 to 2022, but dollars spent on beef have increased by 2.6%, while pounds of beef sold have only increased by 0.40%, indicating further consumers may be spending more per pound of beef. However, seeing that pounds purchased are remaining strong despite these price increases is a positive sign that consumers place a significant amount of value in beef.
As consumers continue to weather various economic hardships, non-essential purchasing decisions – such as whether to dine out or travel – may be placed on the back burner or fully eliminated from the household budget. According to recent research published by Mintel, 57% of the 2,000 consumers surveyed claimed that they would cut back on dining out if they were forced to make additional savings within their household budget6. This finding comes as the Personal Savings Rate (PSR), which measures the percentage of disposable income that consumers save, hits its lowest level since September, 20087. As of April, the US Personal Savings Rate declined to 4.4%, a major contrast to the 33.8% that was recorded after stimulus checks were distributed7. As recessionary fears grow larger amongst consumers, they may opt to cut back on restaurant beef purchases as they appear to have done with beef at retail.
This scenario has already been observed, as the NPD group reports that physical and online restaurant traffic has declined by 2% in the second quarter of 20228. Consumers have claimed that budgetary concerns are one of the most important considerations when deciding whether to dine at a restaurant or to dine at home, second only to taste2. Visits to quick service restaurants, which historically occupies the largest share of total restaurant traffic (82%) has declined by 2% compared to Q2-2022 and is currently 3% below pre-pandemic levels8. Additionally, consumer spending within restaurants saw a decrease of 2%, possibly as a result of increased prices, a phenomenon also observed within the retail beef market8.
Consumers were purchasing slightly less beef in the 2022 summer grilling period than they were during the same period in 2021 but seemed to have increased purchases slightly as of the past few weeks. Additionally, consumers also are spending more dollars per pound of beef in 2022 than they were in 2021. This occurrence is not unique to the beef industry, as a great many other industries and products have been experiencing similar price increases throughout 2022. However, inflationary pressures appear to have been softening from May to June, and supply chains also have slightly stabilized. Given the recent uptick in beef purchases, the latter half of the summer grilling season could continue to perform well despite a challenging season for markets and consumers.