Strong Beef Demand Signals Opportunities for Beef Industry, Retailers and Foodservice Operators

by Michele Peterson Murray, Senior Executive Director, Integrated Communications and Alison Krebs, Director, Market Intelligence, National Cattlemen’s Beef Association, a contractor to the Beef Checkoff

Summary

Do consumers still want beef? You bet they do. Consumer demand for beef is strong. In fact, even with higher beef prices, demand for beef increased nearly 7 percent in 20141, and beef brought more sales for foodservice and retail operators than any other protein2,3.

When it comes to price, consumers say beef is worth it. According to the Beef Checkoff’s Consumer Beef Index, 70 percent say steaks are worth the price, and 83 percent feel this way regarding ground beef.20

The signal is clear: Consumers want beef. Nothing delivers a satisfying meal quite like beef, and consumers remain willing to spend more for the beef they want, even more so than for other proteins.4

Cattle farmers and ranchers have felt these positive signals and herd expansion is underway.  

Discussion

The U.S. Department of Agriculture (USDA) expects the 2015 beef supply to remain near the same level as last year. That is likely why wholesale beef prices in 2015 aren’t expected to experience the same increases as they did in 2014.5,6 According to USDA’s January cattle report, inventory numbers increased 1.4 percent over the previous year. And for 2016, industry analysts are forecasting continued herd expansion, as long as Mother Nature continues to cooperate. 

Retail:  Beef is the Cornerstone of the Meat Case

Another indication of strong demand is the increase in retail beef sales. In 2014, retail beef sales increased more than six percent from the previous year to $23.47 billion , which is clear evidence of shoppers’ willingness to pay for this high-quality, premium protein. While it’s taken much higher prices to ration the available supply, beef sales dollars are up because consumers find beef to be “worth it.”   

According to Oklahoma State University’s Food Demand Survey, consumers have indicated an increasing willingness to pay more for steaks and burgers, while their willingness to pay for chicken breasts has been flat and actually declined for chicken wings.8

Beef also put more dollars in retail registers than any other protein, accounting for 49 percent of fresh meat dollar sales in 2014 and growing 6 percent over the prior year.9

 

And interestingly, beef shoppers are more valuable than the average shopper; a retail purchase transaction that includes beef averages 1.85 times greater than an average shopper basket.10 The same study from Information Resources Inc. shows beef shoppers spend 44 percent more across the store than shoppers who buy chicken.

Foodservice:  Beef’s Significant Value on the Menu

Leading foodservice analyst Technomic reported restaurant sales of beef (in wholesale dollars) rose more than nine percent in 2014 compared to the previous year.11

Steaks turned in a strong performance on the menu in 2014, with dollar sales up nearly 3 percent.12 Additionally, burger orders climbed by 3 percent in 2014 – with nearly 9 billion servings in total, the largest number of servings since 2011 – while grilled chicken sandwiches fell by 9 percent, according to the NPD Group.13

Dinner checks that included steak in the casual dining sector were more than 34 percent more valuable than those with chicken and were more likely to include side dishes, salads and desserts. This is echoed in the fine dining segment, where dinners with steak rang up 33 percent more dollars than dinners with chicken, and were again more likely to include sides, salads and desserts, as well as adult beverages.14

Foodservice operators’ continued placement of beef on the menu is another signal of strong beef demand: 96 percent of foodservice operators included beef on the menu in 2014, which is on par with prior years. 15

Conclusion

Food retailers and restaurants can have confidence offering consumers the beef they want and are willing to pay for, in anticipation of increasing beef supplies as cattlemen and women rebuild the herd.

Ninety-one percent of U.S. adults eat beef once or more per week, and 53 percent report eating beef 3+ times each week.16 Beyond wanting beef, it is worth noting these consumers can feel good about choosing beef. Beef delivers 10 essential nutrients, such as protein, iron, zinc and B-vitamins, in 170 calories per serving on average.17 Overall, beef production per animal has increased 2.6 times since the 1950s.18  For Americans who want to know they are making a sustainable choice with beef, an independent life cycle assessment showed farmers and ranchers have made a seven percent improvement in environmental and social sustainability measures such as emissions, water and energy use and farm safety from 2005 to 2011.19

Additional Resources

  1. Annual All Fresh Retail Beef Demand Index, Dr. Glynn Tonsor, Kansas State University, 2014
  2. Fresh Meat Market Basket Analysis,  Information Resources, Inc., June 2014
  3. CREST Steak and Burger Trends, NPD Group, 2014 “Disclosed with permission of The NPD Group solely for the purpose for which it is being provided by NCBA (a subcontractor to the Beef Checkoff).  The reproduction, dissemination, or use of this information for any other purpose is strictly prohibited without NPD’s prior written consent.
  4. Food Demand Survey, Oklahoma State University, February 2015
  5. CattleFax, January 2015
  6. Food Price Outlook, Consumer Price Index, USDA, March 2015
  7. IRI/FreshLook data categorized by the VMMEAT® System, 52 weeks ending December 28, 2014
  8. Food Demand Survey, Oklahoma State University, February 2015
  9. IRI/FreshLook data categorized by the VMMEAT® System, 52 weeks ending December 28, 2014
  10. Fresh Meat Market Basket Analysis, Information Resources, Inc., June 2014
  11. Usage and Volumetric Assessment of Beef in Foodservice, Technomic, 2014
  12. Usage and Volumetric Assessment of Beef in Foodservice, Technomic, 2014
  13. CREST Steak & Burger Trends, NPD Group, 2014 “Disclosed with permission of The NPD Group solely for the purpose for which it is being provided by NCBA (a subcontractor to the Beef Checkoff).  The reproduction, dissemination, or use of this information for any other purpose is strictly prohibited without NPD’s prior written consent.
  14. CREST Steak & Burger Trends, NPD Group, 2014 “Disclosed with permission of The NPD Group solely for the purpose for which it is being provided by NCBA (a subcontractor to the Beef Checkoff).  The reproduction, dissemination, or use of this information for any other purpose is strictly prohibited without NPD’s prior written consent. 
  15. Usage and Volumetric Assessment of Beef in Foodservice, Technomic, 2014
  16. Center of the Plate: Beef and Pork, Consumer Trend Report, Technomic, 2014
  17. USDA National Nutrient Database for Standard Reference, Release 26. USDA ARS. 2013.
  18. US Cattle Inventory, World Agricultural Supply and Demand Estimates, USDA, January 2015
  19. Beef Industry Sustainability Assessment  
  20. Consumer Beef Index, July 2014
      

 

 

 

 


 

 

Tags: Beef Issues Quarterly, Spring 2015, Trends Analyses

March 29, 2015