CLA State of the Beef Market webinar dives into consumer trends

A panel of beef industry experts discussed the state of the beef industry during the Colorado Livestock Association’s first of a series of webinars this fall.

Todd Inglee, executive director of the Colorado Beef Council, gave an overview of the state of the beef market, and he focused on what consumers are looking for, some of the national and national trends, along with what the CBC is doing to address those issues when promoting beef.

Inglee first discussed the basics of the Beef Checkoff.

“The checkoff program was established, funded and governed by beef producers with USDA oversight,” he said, adding that Colorado started its state level checkoff program in 1965, while the beef industry created the national program in 1985.

Funds were first collected on the national level in 1987 and a $1 per head was collected every time a beef animal was sold. Inglee noted importers also pay the $1 per head equivalent.

“It’s truly a state and national partnership,” he said. “All the programs that we do are centered around deep education, marketing, promotion, and research.”

Inglee said beef councils receive many questions on why beef producers must pay the dollar and why calf prices don’t reflect the extra advertising and promotion that is done.

“We are federally restricted to doing demand driving programs only so we cannot influence the market,” he said. “We’re a demand driver.”

For every checkoff dollar, 50 cents stays at the state level and the other 50 cents goes to the Cattlemen’s Beef Board to use for national level programs. All this is done with U.S. Department of Agriculture oversight.

“They oversee everything related to our budget, our marketing plan, messaging, anything like that,” Inglee said. “We also go through annual mandatory audits from an independent standpoint as well as a national organizational standpoint.”

By law, checkoff dollars can’t be used for lobbying or public policy involvement.

“We can’t use any unfair deceptive practices. We can’t disparage other food commodity groups,” he said. “We can’t promote a specific brand or trade name with any beef product without a special marketing agreement. And then everything we do has to relate primarily to the end product.”

Inglee said the checkoff can’t talk about live cattle production—topics like which breed or production practice is better than another are off limits.

Challenges

As he looks at 2022 what are some of the biggest issues the industry is facing? For someone who is responsible for promoting beef and creating demand, Inglee said the most obvious one is the market disruption caused by the pandemic.

“We’re still feeling that,” he said.

Inflation and rising food costs are all related to the pandemic market disruption. According to Inglee, his group is also looking at social acceptance practices or getting consumers to accept what beef producers do so they feel more comfortable purchasing and consuming beef.

“Obviously health and nutrition is big,” he said. “There’s probably no other time and there’s been more attention faced in our industry, looking through the lens of health and nutrition.”

International marketing is a big issue too.

“With so much value added to the carcass coming from low value cuts being sent and marketed overseas,” he said, “over $400 per carcass is derived from international marketing. Of course that’s always a big item.”

When it comes to beef demand, pricing and consumption patterns, consumer sentiment—the economic indicator that measures optimism about consumers and how they feel about their finances and the state of the economy—is really low as of May 2022, Inglee said..

“It’s the lowest consumer sentiment level since 1952 when they started keeping these records,” he said. “Obviously that was primarily due to inflation.”

From July 2021 to July 2022 food prices have gone up 11%, and according to Inglee when ranking their preferred protein sources consumers remain loyal to beef as a protein. Despite the increased prices in the meat case and uncertainties in the broader economy, consumers still found value in purchasing beef from 2019 to 2022.

“Consumers’ willingness to pay for steak rose $1.82 per pound,” Inglee said. “So that obviously shows that consumers find value in beef and they’re willing to willing to pay for it, which is good. That’s a good thing for the beef industry.”

Looking at the per capita net beef consumption, Inglee said it’s interesting to see the change from how low it was from 2000 to 2014 to highs in 2022.

“The lowest it’s been in a long time. We’ve constantly been increasing since that time period,” he said. “But we’re still remaining strong. We’re growing. I’ve seen some other forecasts that indicate by the end of 2022 that that number may even reach up to 58%.”

If you look at retail and food service, in terms of pounds of beef sold, the numbers show an interesting perspective, especially through the pandemic. The last two years the trend lines have gone down, but there’s a lesson to learn from it.

“Comparing where we are this year versus the last two years, I think price is starting to have an effect on sales,” Inglee said. “We’re starting to not sell as many pounds as we did the last two years as of June 18 of this year.”

Between 2021 and 2022 pounds sold through retail was down 4%. When looking at retail growth in terms of dollars, it’s evident there’s an increase in pricing. In the same time period, prices were up 2% for retail growth. It’s having an effect on the volume of sales.

Food service went from being totally shut off in 2020 because of the pandemic and then supply chain issues hindered it even more.

“But it has come back—it’s rebounding in July 2022,” Inglee said. “The monthly food service sales is registering at $86 billion. That’s just for the month. That’s up 12% from 2021. So that’s positive retail. Food service is definitely bouncing back.”

New opportunities

During the pandemic, e-commerce was huge and grocery sales through this avenue “blew up,” according to Inglee.

“It’s projected that e-commerce and grocery sales is going to account for 20% of all grocery sales by the year 2026,” he said. “Online shopping increased 42% during the pandemic and 63% of shoppers prefer home delivery.”

Inglee said marketers of beef trying to communicate and influence sales need to take these things into consideration—this includes third-party delivery of foods and meats.

Inglee discussed consumer profiles and found beef consumption in Colorado is on par, “if not just slightly higher than the national average.”

“Seventy-one percent of Colorado consumers say they eat beef at least once per week,” he said. “We know that many people eat beef that frequently, so what about the future consumption?”

What are the reasons why people think about eating more or eating less beef? Thirteen percent of consumers, Inglee found, would eat more beef because they enjoy the taste.

“And reasons they would eat less—prices,” he said. “You know price is a big factor.”

Inglee said other reasons why consumers would eat less beef include beef production concerns and the environment.

Another thing they’ve been looking at is the consumer perception between beef and what beef production is. Nationally 67% of consumers have a positive perception of how beef is raised. In Colorado, Inglee said 69% have a positive perception of beef.

“That’s pretty good. We can always do better, but that’s always good,” he said. “Their perception of beef production—look at how those the positive perspectives decrease down to 35% nationally, and even less 27% here in Colorado.”

It’s apparent those are some things producers and those working for the checkoff need to be aware of.

“And as we do our programming, we definitely need to communicate more about beef production to help them understand that’s part of that social acceptance of our production,” he said.

When unprompted in surveys, consumers answer they’re concerned with cattle production because of animal welfare, followed by hormones, the environment and antibiotics.

“When you see a lot of information coming out from the Beef Council we’re trying to communicate to consumers about animal welfare and hormones,” he said. “While it may not seem like it’s a big thing to us as cattle producers it’s obviously top of mind with consumers and that’s why we do these studies and we can see this. We tried to address that and make sure that they understand it in a better light.”

Kylene Scott can be reached at 620-227-1804 or [email protected].