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Will price-sensitive consumers return to beef?
February 16, 2016
Last week’s Cattle Buyers Weekly (CBW) led off with the following headline: “Beef Woes Start With Ground Beef.” The story explains that while retail beef prices are declining, “… Americans are not responding as hoped.” Specifically, the story further explains that,
“Retailers featured beef aggressively in January, especially ground beef. But sales of this critical category were weaker than expected. Consumers have become a little tired of ground beef after having to trade down to it during the 2009-2010 recession, say analysts. They have been eating more pork and chicken, especially as they remain cheaper than beef. Ground beef is no longer their ‘go to’ protein, even in hamburger form, say analysts.”
To provide some context, this week’s illustration highlights monthly retail prices from the Bureau of Labor Statistics retail beef price series through December, as January data is not yet available.
Several items are important from the data. First, the ground beef sector is segmented from other sectors of the beef category. That is, lean and extra-lean ground beef has diverged from overall trends and become an especially important category unto itself experiencing significant pricing power in recent years. Second, retail prices are currently under pressure and the trend is headed to the downside.
With that data in mind, and given the CBW comments about the market, it’s becoming increasingly clear that pork and poultry compete primarily with ground beef – not the whole muscle cuts. In other words, the retail beef case may be challenged most by pork and poultry in the ground beef section – not across roasts and/or steaks. As such, based on the observations, we may begin to witness greater pricing diversion across the beef categories going forward in 2016.
How do you perceive the beef market – specifically the differences between the ground beef categories and whole muscle cuts? Where do you see these price trends headed? What trends are you seeing around featuring and purchasing in your area?
Leave your thoughts in the comment section below.
Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited. The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.
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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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