Consumers key to beef industry recovery

At the recent virtual Cattle U event, Danette Amstein of Midan Marketing discussed consumer beef purchasing trends before and after COVID-19. She said there are two conflicting trends in the beef industry right now that are racing towards each other. One is the economic downturn. Historically, downturns have caused consumers to become extremely price sensitive.

“Many consumers have experienced a decrease in their income since March and, in fact, 25% are still experiencing decreases in their household and only 7% have seen their income go up,” Amstein said. “However, because everyone wants to stay well, they are paying more attention to what they eat and the quality of their food. We have both ends of the spectrum coming together and colliding in a very unique intersection as we watch what consumers are thinking and doing with meat.”

Amstein said since COVID-19 started in March, 51% of shoppers are preparing 50% to 90% of their meals at home, just over half of consumers are now buying and freezing meat more than normal, 61% of consumers are experimenting with new cooking techniques to keep their food more exciting and 45% are purchasing a wider variety of meat cuts.

“The consumer base is absolutely more diverse and complex than it’s ever been,” Amstein said. “It seems to be happening with each new generation and we have to understand their needs in order to help make sure that meat stays relevant and show them it is an important part of their meals.”

Beef demand was on the mind of Dustin Aherin, vice president of RaboResearch Animal Protein Analyst, as he spoke about the influence of macroeconomics on the beef industry. The COVID-19 pandemic has created numerous economic challenges, including the beef industry and financial impacts for consumers. Aherin said macroeconomic experts are estimating 2020 will be the worst economic downturn since the Great Depression. One of his key points was understanding the effect on beef consumption and demand, which according to Aherin, are two different things.

“Beef demand is the relationship of quantity consumed and the price at which is it consumed,” Aherin said. “On the other hand, beef consumption is purely the quantity consumed, which tracks production.”

According to Aherin, 55% of beef was consumed away from home pre-pandemic making the shutdown of restaurants a major blow to the beef industry.

“From a recovery standpoint, we’re estimating that it will probably take eight to 10 quarters to really recover on a food service perspective, so that means hopefully food service will be recovered sometime in 2022,” Aherin said.

Another subject of the pandemic is trade. If there are major economic challenges in a dominant importing country, it will probably reduce the amount of product they import from major exporters. Another interesting aspect to follow in this pandemic has been movement of the U.S. dollar.

“Initially we saw a big spike in the strength of the U.S. dollar, but a lot of that has to do with investors really shifting money away from high-risk assets to a rush for cash or U.S. treasuries, which are considered the safest investment out there,” Aherin said.

Lacey Newlin can be reached at 580-748-1892 or [email protected].