Despite markedly higher prices in recent years, beef has been able to outpace chicken in the meat case.
Both beef and poultry established new record retail meat prices in October. Clearly, that’s an important development with respect to consumer perception at the meat case when making purchasing decisions.
Within that consideration, what’s really important isn’t the absolute price, but rather the relative price among the meat products. In other words, consumers make decisions based upon their respective evaluation of the price/value relationship within the meat case. That consideration invokes the illustration below.
Beef’s retail price compared to pork has remained relatively steady over time. Conversely, though, beef has staged a significant rally vs. broiler prices since 1998 (corresponding to beef’s low point in demand). So, despite markedly higher prices in recent years, beef has been able to outpace chicken in the meat case. That’s been a favorable driver back into the wholesale and live markets. In other words, beef’s pricing power has steadily gained a relatively more favorable position when compared to chicken.
The protein business is competitive. Customer satisfaction is essential to maintaining and growing market share. The beef industry’s success during the past several years in passing along higher prices favorably reflects upon beef’s standing among consumers in the market place. Clearly, the industry has made great strides in recent years across a number of fronts.
However, there’s clearly a limit to pricing power. The enduring question amidst higher prices is, “At what point do consumers begin to push back?” How do you perceive the customer/price/value relationship? How much higher do you think consumers will go before they quit buying beef or other forms of protein? Leave your thoughts below.
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