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The SARS Factor

As severe acute respiratory syndrome sweeps Asia, the fallout is mixed for U.S. beef sales.

When the coronavirus that causes Severe Acute Respiratory Syndrome (SARS) leapfrogged from southern China to Vietnam, Hong Kong, Singapore and finally Taiwan, it accomplished a feat marketers can only dream of — it changed ingrained consumer habits overnight.

Imported beef — more a luxury food than a kitchen staple for many in these markets — felt an immediate impact. Yet the cumulative impact is simply unknown at this point, says Joel Haggard, vice president Asia-Pacific for the U.S. Meat Exporters Federation (USMEF).

The snag is that import statistics for April and May — the two months most effected by the SARS epidemic — won't be available for months.

What is certain is that beef sales went down — and up — depending on the type of cut and where it is normally eaten or sold. These changes in beef consumption resulted from three trends in consumer behavior.

First, the widespread perception that SARS was sweeping Asia nearly emptied the hotels and restaurants frequented by tourists and business travelers.

Next, even hotel, restaurant and institutional (HRI) establishments catering to local consumers saw business decline as their customers opted to eat at home.

Reborn cooks from Beijing to Singapore flocked to markets for meat, produce and groceries. Modern shopping formats, such as supermarkets, tended to gain at the expense of the less hygienic wet markets that normally supply the bulk of fresh foods in these countries.

“In general, the hardest hit have been food and beverage outlets in hotels, followed by higher end Western restaurants,” says Haggard.

“But, I caution that the experience of each operator varies tremendously,” he adds. “What has been interesting about SARS is how diverse the experience has been for different operators.”

Haggard says that, generally, retail fared better than HRI as more citizens cooked at home. He adds that anecdotal evidence suggests that retail meat sales benefited, as did sales of fruits and vegetables.

The increase in sales of fresh foods stemmed from a return to healthy eating habits as consumers tried to counter the threat of SARS with nutrition, he says.

In the early days of the SARS epidemic, Chinese medicine shops sold out of herbal concoctions believed to bolster the immune system. Later, consumers turned to everyday foods for protection. In Shanghai, for example, there were runs on garlic and onions. In Taiwan, a single TV news report on the nutritive values of mung beans sent hordes of face-masked shoppers to Taipei's wet markets.

Predictably, savvy food marketers took to the airwaves to hawk their products' virtues, and the USMEF was no exception.

“USMEF has been promoting beef consumption during SARS [by highlighting] its dense nutrient profile high in vitamin B, protein and zinc,” says Haggard.

Human nature has some universals, at least when it comes to deep-seated fears brought on by airborne plague. Reactions to SARS by the Chinese citizens of Beijing differed little from those of the Vietnamese in Hanoi.

Still, it's important to realize how different China, Taiwan, Hong Kong, Singapore and Vietnam are in terms of beef consumption.

Vietnam, where SARS was first diagnosed in February, is relatively poor and imports little beef. Its sprawling neighbor China is slightly better off, but it is an agricultural giant that raises cattle. What little beef it imports comes mostly through Hong Kong. Together, these markets imported 73,897 metric tons (mt) of beef in 2002, of which the U.S. share was 26,548 mt. Per capita consumption, needless to say, is low except in Hong Kong and in China's coastal cities.

Singapore and Taiwan, in contrast, are affluent net food importers. Last year, Singapore imported 15,697 mt (the U.S. share was 740 mt) and Taiwan imported 65,213 mt (the U.S. share was 13,254 mt).

And, in sorting out the impact of the SARS epidemic, one must consider the timing of its onset.

The World Health Organization declared Vietnam free of SARS on April 28 while the epidemic was waning in Hong Kong and Singapore but raging in China and Taiwan.

“We are hoping that the ‘SARS effect’ will be confined to a quarter,” says Haggard.

“Our sales of U.S. steak in South China recovered earliest, as the disease cycle in the area peaked the earliest. In Hong Kong, it appears as if Mother's Day marked a turn-around in the recovery sentiment of the HRI sector,” he adds.

Sentiment, oddly enough, is all that a recovery in local HRI needs. When locals decide to grab their wallets and walk to the corner restaurant, the problem is solved.

The hotel food and beverage industry catering to international travelers will lag behind, however, until travel to the region resumes its former levels.

“We are already seeing clear cut evidence of recoveries in key markets where HRI sales are important to U.S. beef exporters,” Haggard says.

Haggard points out that the U.S. beef is sold to a broad base of countries in Asia.

“Exports of beef to Japan and South Korea in the first quarter of 2003 were strong …” he says. “We watch the whole Asian portfolio, not just Taiwan, Hong Kong, China and Southeast Asia.”l

Glenn Smith is a freelance writer based in Taipei, Taiwan.