Higher costs aren’t deterring beef shoppers

Beef is proving to be extremely resilient within the meat department.

Despite an average price increase of 6.1% for the 52 weeks ending April 21, 2024, beef volume sales fell just 0.5%, reports Circana, a Chicago-based market research firm. Beef accounts for 53.7% of meat dollar sales, up 1.5% from a year earlier.

“Beef is at a fairly high historical price but people are still highly engaged with it,” said Chris DuBois, Circana executive vice president of the protein practice. “While eating beef at home is more expensive, it is relatively inexpensive versus eating at restaurants.”

“A significant portion of shoppers are willing to continue to purchase beef at these higher prices and there is only one justification for the purchase: it tastes great,” said Tom Barnes, chief executive officer of Category Partners LLC, an Idaho Falls, Idaho-based fresh food industry research and consulting firm.

Ground beef is especially popular. Despite a 6.4% price increase for grinds to $5.02 a pound, volume sales grew 1.4%. “That is an amazing feat in this type of marketplace in which 1% growth is a big deal,” DuBois said.

Grinds are benefiting from shopper interest in convenience, he said, noting that consumers can easily use, freeze, and reuse ground meats while also incorporating the ingredient in a wide range of recipes.

Beef sales are likely to be vibrant over the next several months as the summer grilling season has on average accounted for 29% of yearly beef pound sales and 30% of dollar sales since 2020, states the Centennial, Colo.-based National Cattlemen’s Beef Association (NCBA). NCBA research found that 96% of consumers plan to grill over the summer and budget considerations are expected to be top of mind.

Merchandisers can further trigger beef purchasing by offering value-added options, Barnes said, noting that “more and more consumers are looking for convenience and flavor, so ensuring fresh options of pre-marinated or pre-seasoned meats can also entice consumers.” 

In addition, retailers can upsell beef by spotlighting high-quality cuts, he said. “American consumers buy with their eyes, and in a less price-sensitive category like fresh beef, they can be swayed to spend more if the consumer feels the value is there,” he said. 

Going for grinds

Grinds are becoming more popular in other meat categories as well. Ground chicken volume sales grew 11.2% over the last year, which was spurred in part by an average price decline of 1.6% to $4.47 a pound.

Ground pork volume sales increased 8.1% with an average price drop of 2.8% to $4.15, and ground turkey sales grew 4.3% with a 0.3% price decline to $4.43.

The total chicken category had the largest volume gain of the major proteins, with sales up 2.7% as average prices declined 2.2%. Total pork volume fell 1.8% despite a 1% price decline, and total turkey sales increased 0.3% with a 1.9% average price increase.

While overall meat prices increased 0.9% in the last year, retailers still can “steal” restaurant business by illustrating to shoppers the much lower cost of preparing a meat-centered meal at home versus dining out, DuBois said.

“Meat prices are settling into a sweet spot compared to restaurants as it costs four times more per meal on average to dine out versus eating at home,” he said. “Image what a beef ribeye steak at the current average price of $11.58 a pound would cost at a restaurant. Demonstrating that value is a huge opportunity for supermarkets and they should pound it home on signage again, and again, and again, that it is cheaper to cook at home.”

Situating meat-based cross-merchandising displays in stores is an effective way to present eating ideas while enabling shoppers to conveniently obtain side dishes and other meal components, DuBois said. “Helping shoppers with solutions is a big key to growth,” he said. “Making it easier for them can make all the difference in driving sales.”

Displaying images of cooked meats in stores; posting online videos of chefs preparing meat dishes; and having butchers at full-service counters provide meal information are further ways to engage shoppers, DuBois said. “Showing people the finished meal is more important and powerful than just merchandising raw items,” he said.

“Whether it be in digital marketing, shopper marketing, or some other medium, making sure the shopper is getting the right meat for the right application with the right cooking instructions is critical,” Barnes said. “The meal is only worth the expense if it's delicious, so retailers have to leverage information to stack the deck in the shopper's favor.”

Cost remains a concern

Continuing inflation, however, will make meat merchandising increasingly challenging, Barnes said, noting that an increasing number of consumers will choose cheaper proteins if meat prices keep rising.

“Fresh chicken is going to continue to be the low-cost leader in the meat department,” he said. “Good pricing and presentation on chicken will drive business to the department.” 

It is important that retailers also serve as “partners” in helping shoppers select and prepare meats that will satisfy them, he said. “This is a far more defensible point of difference than price,” Barnes said.

Higher beef prices are resulting from smaller herds, strong demand, and rising operating costs, said Laura Hinton, NCBA senior director of channel marketing.

Retailers that provide money-saving coupons while featuring beef in ads will help meet the greater consumer interest in “stretching their dollar,” said Jill Rittenberg, NCBA senior executive director of channel marketing, global marketing, and research. She added that it also is important for merchandisers to respond to shoppers’ interest in meal suggestions and preparation information.

“Retailers can utilize appealing beef photography in store circulars, store signage, social media, customer emails, and on their websites and shopping apps to inspire beef meals,” she said. “Store staff trained on beef cuts and cookery also can help shoppers become more confident with preparing beef at home.”

Seattle-based PCC Community Markets is adjusting to higher sector expenses and the continuing popularity of beef by working with a beef partner on an allocation program in which the retailer buys an entire animal to ensure steady supply and price, said Erik Lind, meat and seafood merchandising manager.

“Due to our strict quality standards and the cycle of the industry driving costs to historic highs, beef is pressured like few other categories,” he said. “The incoming cost of goods has driven our costs to historic highs, resulting in the reduction of margins to stay competitive.” 

The retailer, which operates 15 Seattle-area stores, differentiates its offerings by following strict animal welfare measures; only merchandising certified organic or non-GMO fresh meat and poultry; and forming relationships with local ranchers and producers to ensure higher standards and better quality, Lind said. Stores also are offering multiple price tiers in various categories, including chicken, in accordance with an item’s attributes, he said.

To spotlight its fresh meats, PCC features the proteins in weekly ads and promotes items via in-store signage, e-mail marketing, the company’s website, and social media, including its “Deal of the Day” offerings.

Changing with the times

In addition, PCC is experimenting with a new merchandising model that will transition a couple of stores from full-service to a self-service model, Lind said, noting that “sales patterns of our shoppers in meat and seafood are trending heavily to self-service.”

The retailer anticipates “having better in-stock conditions with more consistent assortments, including more variety,” he said. “We will continue to offer custom orders and special cuts, but this opportunity is in alignment with trends for shoppers’ preferences.”

Sales of convenience-oriented self-service selections are already on the upswing, with the largest growth involving grab-and-go and ready-to-cook “chef-inspired” items that meat department associates prepare and assemble in stores, Lind said. He added that the specific inventory varies by location in accordance with such factors as the logistics of bringing in and butchering large cuts, and the requests of customers at the meat counter.