Beef demand strong, but consumers feeling the pinch
Despite consumers feeling the pinch of inflation and rising costs of living, demand for beef in the U.S. was strong in 2023. It’s a trend that cattle producers should be mindful of, especially as herd numbers have dropped throughout the nation over the last two years, giving consumers little price relief on beef products, according to the National Cattlemen’s Beef Association (NCBA).
“Food inflation has been a topic of interest recently. Although volatility is not a new trend, it has become a bigger issuer recently,” said Haden Comstock, associate director of market intelligence and tracking for NCBA. “There are a myriad of factors causing this from 2021 and 2022, but it seems to have stabilized for the moment.”
In the last year, Comstock noted that beef is the only protein category that has experienced inflation, and the amount of beef available to each American has dropped.
“In 2000, there was 67.8 pounds of beef available per person in America, and that is projected to be down to 53.8 pounds in 2024,” Comstock shared. “That means prices for consumers won’t go down, as there isn’t any help on the supply side with the Midwest going through drought this year.”
The financial situation for consumer households has also shifted, as data shows that households have less in savings than they have had historically.
“We get a little concerned about customers on the lower end of the spectrum as they are diminishing their savings and their earnings aren’t going up,” he said. “But as we look at the consumer sentiment index, we do see that consumers have cautious optimism about the future.”
In fact, although beef prices may be going up in the store, most consumers still plan to have protein in their everyday diet, according to Mackenzie Schoen, NCBA associate director of market research. “If we look at the protein purchased in the country, 82 percent is chicken, 71 percent is beef, and 46 percent is pork.”
Consumer data also shows that three-fourths of meals are being cooked at home and that consumers plan to continue doing so.
“Food inflation is having a huge impact on consumers, with spending up on necessities like food, gas, rent or a mortgage, so there is less discretionary spending. As a result, people are eating out less,” she said. “We can also expect to see some spending habits change, like consumers looking for more deals or using coupons more often.”
However, Comstock said that beef demand is holding up pretty well.
“In 2023, beef held 39 percent of the market share, with pork at only 17 and other proteins at 39,” he said. “We’ve seen plant-based items basically fall off a cliff on demand, but beef has held up in the demand for both steak and ground beef.”
In the coming year, Comstock said the beef industry should expect to see consumers making some changes to save money.
“We will see people trading down from higher-priced cuts like steak and roasts down to ground beef,” he said. “Ground beef has always been a staple and it freezes better than other cuts. People also like being able to buy it in bulk.”
@agupdate