Hindsight 2020: Beef’s Market Trends Through the Pandemic

September 9, 2020

Meat food handling safety gloves and suit with mask

There is no doubt that COVID-19 has disrupted, changed, and damaged many industries across the country. From closed movie theaters, school disruptions, and restaurant shutdowns, this pandemic has shifted the way Americans and businesses operate in the modern economy. The cattle and beef industry were no exception to this disruption. Reducing supply, increasing price and demand, and limiting the capacity of restaurants are some of the ways that the pandemic has left its mark on this industry. But it is not all negative, the pandemic has also highlighted interesting strengths in the beef industry. The Beef Checkoff is tracking beef in retail and foodservice markets and tracking consumer beef-buying behavior during the pandemic as reported below.

For the last 52 weeks ending June 2020, retail stores have experienced significantly elevated beef demand, with dollar sales 14% higher and volume sales 8% higher than last year.1 However, the foodservice industry (restaurants, schools, prisons, etc.) typically comprises ~60% of beef expenditures in the U.S. Due to the nationwide restrictions on in-person dining and social gathering, transactional activity in the foodservice industry decreased 20% on a weekly average from the beginning of March to the end of July.2 Even taking these significant challenges for the beef industry into account, per capita consumption of beef is only expected to drop 1 pound versus last year and will still remain 3 pounds per person higher than 2015 consumption.3 The state of the industry is strong, with consumers choosing beef on a regular basis as their protein of choice.

As COVID-19 spread across the nation, consumers rushed to their local grocery store to “stock-up” on groceries, especially proteins. Since April 10th, on average 58% of consumers claim to be stocking up on their groceries more than they typically would. The majority of consumers (68%) have between 1-4 weeks of food on hand, with only 8% of consumers claiming they have less than a weeks’ worth. Beef is a common staple consumer are stocking up on, specifically ground beef, with over 50% of consumers claiming that they will continue to stock up on this staple in the future.4 At the pinnacle of this elevated demand environment, retail beef demand was ~90% higher than the previous year.1

While on one-hand the market suffered from an increasing demand shock, on the other it experienced a decreasing supply shock. The unique nature of the virus allowed it to spread quickly among workers in slaughterhouses and packing facilities, reducing the capacity of these operations to produce beef cuts. These production shortages led to spiking retail prices for most meats and these inflated prices were featured most prominently in the beef industry. At the peak of the supply-chain issues, beef per pound increased ~26% year over year to a total of ~$7.40. Comparing this to chicken and pork, which increased 10-15%, beef was the most expensive protein relative to normal prices.1 An adage says, “the thing that fixes high prices is high prices”, which harks to the basic economic principle that increased prices reduces demand. However, food products are relatively inelastic; beef demand grew during the pandemic despite higher prices, as consumers went to the grocery store to ensure their family’s food security.  

Source: IRI Total US, MULO, 1 week % change vs. YA

Restaurants, schools, and other public entities make up what is called the “foodservice” industry. In response to the pandemic, many cities and states implemented regulations either banning or limiting in-person dining at restaurants. School districts across the country also were shut down in the spring, limiting the amount of beef demand served in the K-12 school industry. At the peak of the virus outbreak, full-service restaurants were operating with ~20% of transactional activity compared to the prior year.2 Slowly, restaurant activity has returned as state governments lift regulations on the foodservice industry.  

Source: The NPD Group COVID-19 Situation Analysis Summer

Along with changes in how consumers purchase beef products, their perception on the beef industry has shifted. Tracking consumer perceptions in 2020, points to a positive story and great opportunity for beef.  NCBA’s Consumer Beef Tracker data, funded by the beef checkoff, allows us to track consumer perceptions on an ongoing basis. From January to July 2020 the percentage of consumers claiming to eat beef at least weekly has increased from 67% to 72% compared to 2019. In addition, the number of people with a positive perception of beef has increased during this time, resulting in positive perceptions that reached 70% for the first time. Additionally, positive production perceptions regarding how cattle are raised have increased 18% compared to 2019.

The pandemic has highlighted interesting strengths in the beef industry. Even with inflated prices, consumers still choose beef as their protein of choice. Supply chain issues were experienced at the beginning of the pandemic with the packing house slowdowns; however, beef producers were able to resolve the supply shortage in just a few weeks. As the pandemic continues, it is expected that retail sales will continue to be elevated compared to the prior year, while foodservice activity is forecasted to remain slightly lower than last year. The cattle and beef industries have proven to be resilient throughout history; this pandemic is no different. Through multiple challenges, including skyrocketing demand and reduced supply, the industry has shown why consumers trust beef and cattle producers. Beef continues to remain the protein of choice for consumers and has proven to be a staple in consumers’ diets. 

  1. IRI, Total US MULO, Last 52 weeks ending 8/2/2020
  2. NPD, Weekly Situational Analysis, 7/31/2020
  3. CattleFax, Per Capita Beef Consumption Forecast
  4. Beef Behaviors and COVID Report, April-July 2020