BEEF Editors' Blog

Will Beef Production Align With Demand In 2014?

A lot of concern has been raised about whether or not beef will price itself out of consumers’ reach.

If a recent consumer study is any indication, chicken wings are the food of the future. And that has many cattlemen worried.

Attend nearly any gathering of cattlemen for the past several years and somewhere in the conversation, someone will say beef prices are too high and consumers will soon be forced to buy more pork and poultry. In fact, several years ago, I boldly stated in an industry outlook and analysis I did for our sales staff that we would test consumers’ resiliency and desire to keep beef in their diet and would quickly discover just how loyal they really are to our product.

In the years hence, we have indeed tested consumers. Retail beef prices are at an all-time high; cattle numbers are at historic lows. And so far, consumers have thumbed their collective noses at my prediction several years ago that they would soon switch from beef to other proteins.

So the question is, how much longer can we expect consumers to keep beef front and center?

The answer, apparently, is we don’t know yet. At least that’s what I can decipher from the results of several recent consumer surveys.

A year ago this month, Oklahoma State University (OSU) began its monthly Food Demand Survey. Among the interesting trends in the data is that consumers consistently expected to pay higher prices each month for meat, especially beef, and that they planned to buy more chicken each month and less beef and pork.

But the extent to which consumers acted on those plans appears to be muted. Consumers’ willingness to pay, expressed as an index with May 2013 as the benchmark, showed steak, after bouncing around, hit 97.7 in April 2014, for a decline of 2.3 points. Hamburger came in at 99.1; chicken breast at 98.9; and pork chops at 96.1.

Guess what showed an increase? Chicken wings jumped to 109.4 and deli ham increased to 106.

I’m neither a statistician nor an economist. In fact, it was those two subjects in college that encouraged me to seek an occupation in my present line of work. But it seems to me, even though the trend for both steak and hamburger is down, it’s not down enough to set off any alarms, at least not yet.

“More people are saying they'll buy less beef than there are people saying they'll buy more,” says Jayson Lusk, holder of the Willard Sparks Endowed Chair at OSU and one of the authors of the FooDS demand survey.  “Given the relatively stable willingness to pay, and stated expectations of rising beef prices that was also revealed in the survey, I interpret this to mean that higher prices are reducing consumption (as a downward sloping demand curve would suggest), but that people still want and like beef.  Indeed, it appears expenditures on beef are relatively stable; people are still willing to spend about the same amount on beef even though they're buying less because of the higher prices,” he says.

There’s more. It appears even millennials don’t live by chicken wings alone. Results of a checkoff-funded study of “mature millennials,” consumers 25-34 years old, was released this week and showed some interesting trends.

Millennials eat beef a couple times a week, which is not different than non-millennials, and their reasons for choosing beef are also the same; most, regardless of generation, want a great-tasting meal, value and a food they feel confident preparing.

And both groups of consumers recognize beef nutrients such as protein and iron. However, B vitamins and zinc are nutrients less associated with beef.

While there are many similarities across generations, there are also a number of clear differences. For example, millennials are more likely to be influencers and want to share their beef eating experiences with others. This group of consumers is eager to learn how to cook better and is very engaged with food. Importantly, when millennials are disappointed with a meal outcome they are much less likely to try this meal again, which obviously affects their beef eating experience and how willing they are to try new beef recipes.

And finally, the 2014 Power of Meat survey, conducted by the Food Marketing Institute and the American Meat Institute Foundation, found, among many other things, that while the frequency of meat and poultry consumption has not yet fully recovered from pre-recession levels, meat is becoming more common at the dinner table. However, while beef and chicken remain the most purchased proteins, more consumers are open to switching between cuts and species, such as lamb and pork, to achieve greater value.

While we need to continue worrying about the ever-increasing cost of beef in grocery stores and restaurants, there’s not much we can do about it until the industry collectively begins to expand cattle numbers. BEEF surveys of our readers show that a strong desire to do just that has been in place for several years, but drought and other factors have blunted any carry-through of those intentions. Will 2014 be the turnaround year? Some think so.

In the meantime, perhaps what these survey results tell us is this: we should look for the opportunities that our present situation provide us to further explore how we as food producers—and yes, that’s what we are—can continue to deliver the value that consumers expect when they pay hard-earned money for beef.

 

More articles to enjoy:

The Wheels Are In Motion For Beef Industry Expansion

BEEF Poll: “Are You Concerned About Global Warming?"

Hooray! We’ve Succeeded In Scaring Our Kids

 

Discuss this Blog Entry 1

John R. Dykers, Jr (not verified)
on May 14, 2014

food demand, and particularly protein, will exceed supply for the next several decades at least. Whether or not the people needing the food will have the money to pay for it will be increasingly precarious.

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