Retail beef prices have continued an upward surge in the marketplace through mid-summer, with beef’s All-Fresh Retail Price series establishing a new all-time record versus pork and poultry in June and July. Accordingly, this week’s illustration highlights the relative price difference between beef and its competitors. Beef is now at all-time highs versus the competing meats. Beef is running 1.65 times the price of pork and nearly 3.14 times higher relative to poultry.
Beef’s price per pound, and the total expenditure associated with the package, is an important determinant when consumers make purchasing decisions. However, the relative price is also very important; the delineation influences consumer perception at the meat case.
That’s because purchases are rarely made in isolation. Instead, the decision to purchase is based upon a consumer’s evaluation of the relative price-value relationship. And that typically involves comparison among competing products, in this case pork and poultry. That is, consumers appraise price versus assigned value across various choices and then make a decision based on the outcome of that assessment.
Given the steady surge in beef prices in recent years, there’s increasing concern that it may become too expensive in the retail meat case. And if so, that could result in some demand destruction going forward. However, that seemingly hasn’t happened; but it could, given the sharp uptick in relative prices in 2015.
Clearly, there’s a limit to beef’s pricing power. The question always remains, at what point do consumers begin to push back against beef prices? How do you perceive beef’s pricing power, both looking back and into the future? How do you perceive the customer-price-value relationship? How much higher do you believe beef prices can go before consumers will reduce their beef purchase in favor of pork and poultry?
Leave your thoughts in the comments section below.
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