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Beef Demand Is Soft In Kickoff To Summer Grilling Season

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Consumers feel sticker shock to rising beef prices.

Memorial Day is regarded as the kickoff weekend to summer. Even though the official start to summer doesn’t roll around until June 21, it’s evident that folks are ready for sunshine and summertime way before the calendar says summer is here! Whether it’s going to the beach, camping, hosting a backyard bonfire, or just spending time at home, there is one common theme that can be found at these summer social events -- barbecuing.

Although we grill year-round at home, I still get excited about grilling in the summertime. We pull out the smoker and the grill and always have some kind of meat on the menu during the summer months; we often will eat outside in the evenings, giving us a good excuse to enjoy the warm day and pretty sunset.

When I walk through the meat section at the grocery store, I can sure empathize with the sticker shock consumers face when selecting which meat to prepare for their own summer barbecues. Certainly, a pork chop or chicken leg is much cheaper than a ribeye, and in an economy where consumers are watching their pennies pretty closely, the fact that beef is being passed up in lieu of cheaper proteins could be problematic.

According to the Wall Street Journal, “Higher beef prices are pinching food budgets for consumers already wrestling with a rise in gasoline prices, the expiration of the federal payroll-tax holiday and stubbornly high unemployment. They're also expected to drive consumers to other meats after the holiday weekend, one of the biggest beef-sales periods of the year. That could threaten high beef profit margins for meatpackers like Tyson Foods Inc. and Cargill Inc. and also pose a challenge for restaurants and grocery stores.

The article points out that Memorial Day week is typically the third-highest for weekly U.S. beef sales, after the Fourth of July and Labor Day holiday weeks. That’s according to the National Cattlemen's Beef Association. Analysts are saying that it’s unclear how much beef sales may suffer this year as consumers turn to cheaper protein alternatives.

Last year, Americans spent $288.40/person on beef, a 4.2% increase from $276.80 in 2011, thanks to rising retail prices, Jim Robb, director of the Livestock Marketing Information Center in Denver, is quoted in the article. In fact, U.S. beef sales reached $90.6 billion last year, up from $86.4 billion in 2011, Robb adds.

“Consumers have been fickle about beef this year," the WSJ article continues. "In the first quarter, beef sales volumes fell 1.7% from a year earlier at 18,000 grocery stores, supermarkets and other retail outlets tracked by market-research firm Nielsen Co. In contrast, pork volumes rose 3.1% and chicken volumes were flat.

Consumers have faced a series of record beef prices at retail over the past few years amid tighter supplies and a boost in demand from overseas buyers of U.S. beef. Although the USDA predicts retail beef prices will finish the year 3% to 4% higher, that is lower than the gains of 6.4% last year and 10.2% in 2011.

“Still, expectations for weaker beef demand are evident in the $14 billion cattle-futures market, where many traders and investors are betting that consumers will lose their taste for beef after the holiday weekend. Futures prices for live, slaughter-ready cattle have tumbled 10% since hitting a record $1.3385/lb. on Jan. 3.”

The challenge for us will be to promote beef to our domestic consumers this summer. We can’t get complacent and assume that just because our customers like the taste of beef that they will continue to buy beef, despite the high costs. So, we must continually remind them why beef is worth the extra buck and also educate consumers on the budget-friendly beef cuts that are available and how to prepare them. The task at hand is a big one, but it’s a worthy one.

How can we better promote beef this summer? What things are happening in your communities to boost beef demand? Share in the comments section below.

 

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Discuss this Blog Entry 1

Anonymous (not verified)
on May 29, 2013

How do you know per title "Demand Is Soft In Kickoff To Summer Grilling Season", you used a pre-holiday WSJ story?

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BEEF Daily Blog is produced by rancher Amanda Radke, one of the U.S. beef industry’s top social media “agvocates.”

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Amanda Radke

A fifth-generation rancher from Mitchell, SD, Amanda grew up on a purebred Limousin cattle operation in which she and husband Tyler are active. She graduated with a degree in agriculture journalism...

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