Over the years, this column has repeatedly focused on the importance of beef quality to consumers and the subsequent impact on beef demand. Perhaps that discussion has never been more significant than right now, given where we are in terms of market dynamics.
During the first three weeks of May, the boxed beef market has established some new milestones. The aggregate of Prime and branded sales represented approximately 26% of all boxed beef revenue. That’s because total dollar generation has surged from the two categories. And the week ending May 18 witnessed Prime and branded sales totaling nearly $160 million!
Meanwhile, the 52-week average is now running around $114 million – that’s also a new high-water mark. In other words, May’s market action isn’t a seasonal flash in the pan; as evidence by this week’s illustration, this is a long, enduring, relentless trend.
All this confounds conventional wisdom. In general, as a product (e.g. high quality beef) becomes less scarce, it should be worth relatively less over time. But the industry continues to produce more high-end product – and premiums for that product have remained surprisingly stable.
Demand is the differentiator. Consumers are sending the signal they desire Prime and branded products and the market is able to clear that product in easy fashion.
What’s your perception of these market signals? How much market share can Prime and branded products ultimately garner across the beef complex? What changes have you made, and/or are making, to adapt to the changing beef market environment? Leave your thoughts in the comments section below.
Nevil Speer serves as an industry consultant and is based in Bowling Green, KY. Contact him at firstname.lastname@example.org.