Last week’s Industry At A Glance (IAAG) chart focused on meat spending and market share. And, along those same lines, several months ago, another IAAG chart took a look at what’s occurring around retail meat prices. Given beef’s recent price run during the past several months, the subject deserves another look.
Most significantly, beef established a new record in March at $5.72/lb., while pork and broiler prices remained flat to softer. The accompanying graph illustrates beef’s strengthening price position in the meat case, which is especially evident in comparison to the broiler composite price, as beef exceeds the broiler price by 2.75 times.
As mentioned in the previous piece, it’s never absolute price that really drives consumer decisions, but rather relative price differences. That is, comparison shopping becomes important with respect to consumer perception about affordability and the ultimate decision of buying one type of product vs. the other.
The protein business is highly competitive. That said, the price/value relationship is essential to maintaining market share. Therein enters the key question about higher prices. Specifically, are higher prices a reflection of improved pricing power because of beef’s improved quality and eating satisfaction? That being the case, beef’s retail price run should be favorably viewed from a competitive standpoint.
On the flip side, though, is the perception that perhaps beef will price itself too high and ultimately establish demand destruction. In other words, higher beef prices could lead to erosion of market share.
As noted many times over the years, there’s some sort of limit to pricing power. Surprisingly, though, consumers have seemingly not breached that point; market share has remained solid during the past several years.
At what point do you believe consumers begin to shirk beef in favor of pork or poultry simply because beef’s price is too high? How do you perceive what’s occurring around price at the meat counter? Are higher prices a favorable reflection on the industry’s gains in the past several decades, or is it a detriment to creating satisfied customers? Leave your thoughts below.
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