Skip navigation

ANALYSTS SEE BEEF DEMAND FALLING

Organic beef and the retailers that specialize in it could be in a position to benefit from last month's revelation that meat from a cow infected with bovine spongiform encephalopathy, or mad cow disease, entered the food supply, analysts said."You're getting all kinds of assurances that the beef supply is OK, but my sense is that this could be good for a Whole Foods or a Wild Oats," said Jonathan

Organic beef and the retailers that specialize in it could be in a position to benefit from last month's revelation that meat from a cow infected with bovine spongiform encephalopathy, or mad cow disease, entered the food supply, analysts said.

"You're getting all kinds of assurances that the beef supply is OK, but my sense is that this could be good for a Whole Foods or a Wild Oats," said Jonathan Ziegler, principal at PUPS Investment Management, Santa Barbara, Calif. "Organics are probably going to get a little bit of a lift from this."

He said he also expected consumers to shift away from purchasing beef in the near term. He said he didn't expect sales to suffer much at traditional supermarkets, however, as some consumers simply switch to buying alternative proteins.

Beef prices are expected to drop as a result of the episode, however.

In a research report, Mark Wiltamuth, analyst, Morgan Stanley, New York, said the cutoff of beef exports might drive beef prices down. "Although red meat prices have been running up near record levels due to tight supply and strong demand, we believe this news from the USDA could bring a decline in meat prices," he said.

Beef prices in Canada fell up to 65% last year after the discovery in May of a single BSE-infected cow.

Ziegler said the costs of the outbreak to the three largest traditional supermarket operators -- Albertsons, Safeway and Kroger -- will be minimal compared with the costs of the strike-lockout in Southern California, which began Oct. 11.

"This is just another portion of the business that is going to be soft for a while, along with the softness of the sales down here in Southern California," he said. "If you get another cow like this, then what we're talking about right now gets a lot more serious, but this seems like an isolated incident."