Beef is best when shoppers make buying decisions

Consumers continue to perceive beef as the most favored option in the marketplace.

Nevil Speer

January 14, 2020

2 Min Read
Beef demand
Nevil Speer

Beef demand in 2019 was better than anticipated and last week’s column highlighted the importance of beef quality to beef demand: “Consumers want the best beef you can produce and are willing to pay for it.”  

The column further noted, “There was a day when many argued that beef would price itself out of business…high prices would create demand destruction and indirectly generate increased market share for pork and poultry.”  

To the end, it’s important to remind ourselves about the principles around beef demand. Too often, demand gets confused with consumption – the latter being simply a reflection of production and disappearance. It doesn’t reflect purchasing decision-making by consumers or how consumers perceive the price/value relationship. 

If consumers don’t perceive beef as a favorable product, there’s little pricing power to clear the market of existing supply, regardless how low that might be. On the other side, as supply gets bigger (beef products possess less scarcity), there’s inherently downward pricing pressure.  

Beef demand

All that brings us to this week’s graph. It highlights the relative retail price relationship between beef versus pork and poultry, respectively. Over time, there’s been a clear strengthening on both fronts. 

Moreover, beef has been able to maintain its relative price advantage ever since the production lows in late-2014 and early-2015. There’s substantially more product available since those production lows, but the beef industry has held on to its pricing power.   

Related:2020: Strong beef demand across the globe to continue

In other words, high prices have NOT created demand destruction over time. This is all a favorable sign for beef demand.  

And it harkens us back to the importance of beef quality discussed in the previous week. Consumers continue to perceive beef as the most favored option in the marketplace, largely due to improved quality and consistency over time, and willing to pay up for it in the marketplace. And in the face of a stronger economy, that favored position could ratchet up even higher.  

About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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