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The National Cattlemen’s Beef Association (NCBA), as a contractor to the Beef Checkoff, is continually tracking trends, monitoring issues, and surveying the general landscape that has the potential to impact the beef industry. NCBA does this through a variety of tools, most notably by conducting consumer and market analysis, funded by the Beef Checkoff, while also scanning secondary research resources. Across the food landscape, it appears that increased prices for domestic goods, notably food products, continue to play a major role in consumer sentiment and purchasing habits. While some recent optimism has been noted regarding the U.S. economic situation, consumers are still showing signs of worry. This article will touch on a variety of topics including the current state of consumers and beef, e-commerce, satisfaction, meat substitutes, nutrition, and sustainability.
Figure 1. Index of Consumer Sentiment1
Before diving into specifics, it is important to understand the current consumer mindset. For many, current economic conditions have caused a good deal of apprehension when it comes to purchasing decisions for various goods and services. According to the University of Michigan’s Index of Consumer Sentiment (Figure 1), consumers are especially concerned about their current financial situations, and are feeling apprehensive for the trajectory of the U.S. economy. Sentiment levels nose-dived from 2020 – 2022, eventually hitting their lowest level recorded since data collection began in 19521. While sentiment has appeared to have increased slightly from June 2022 to August 2022, there is still a large gap between the index scores of 2022 and previous years. Much of this apprehension can be attributed to inflation rates not seen since 19812. While energy price increases have been the main driver behind the recent levels of inflation, food prices have also increased 11% from July 2021 – July 20222. While this level of inflation is still alarming, price levels do appear to be curbing slightly. From June 2022 – July 2022, the Consumer Price Index (CPI) level for all items remained virtually constant (decreasing by 0.02%). Likewise, three out of the five major protein sources (beef, pork, chicken, fish/seafood, and eggs) saw decreases from June – July. While food prices saw an overall increase of 1% from June – July, this increase was counterbalanced by a decrease in energy prices (mainly gasoline)2.
Consumers have already responded to these continued food price increases, as foodservice performance is expected to suffer3. Dining out (and other leisure activities) was the number one choice to be cut by consumers in the face of household budget shortages4. Throughout the second quarter of 2022, online and in-person restaurant visits decreased by 2% compared to the second quarter of 2021 and is currently down 6% from the second quarter in 20193. Throughout the first 28 weeks of 2022 ending 08/13/2022, $20.1 billion worth of beef was sold in retail markets, up 4.6% from the same period last year5. However, that $20.1 billion purchased 3.3 billion pounds of beef, which is 5.7% less pounds of beef purchased during the same period last year5. Additionally, these 3.3 billion pounds of beef are also 12.1% less than the pounds of beef consumers purchased during the same period in 20205. These contradictory retail sales statistics indicate that consumers are purchasing less pounds of beef than they were last year but are spending more per pound on that beef.
Figure 2. Willingness to Pay for Steak compared to Average Steak Price per Pound 5,6
While these increased price levels are likely to have strained household food budgets, willingness to pay for beef remains strong. As Figure 2 shows, willingness to pay for steak has topped the average price per pound between April – June 20225,6. Willingness to pay for steak hasn’t exceeded the average price per pound since April – June 2021, indicating that consumers still find value in purchasing beef, despite uncertainties within the broader economy.
Figure 3. E-Commerce Compound Annual Growth Rate for Grocery Sales7
An area that continues to see tremendous opportunity and growth in the marketplace is e-commerce. Throughout the grocery shopping space, Figure 3 shows that the compound annual growth rate has been projected to continually increase and account for 20% of total grocery sales by 20267. Online retail sales for the first quarter of 2022 totaled $231.4 billion, which is 14.3% of the total quarterly retail sales, an increase of 7% from the first quarter of 2021, and a 2.4% increase from the fourth quarter of 20218. Consumers began shifting their grocery shopping preferences largely during the COVID-19 pandemic.
During the pandemic, consumers began to favor online forms of shopping (both click and collect, and scheduled delivery). Net intenti of consumers shifting to online forms of shopping increased by 42%, while decreasing by 14% for physical stores or food markets9. Additionally, consumers are increasingly choosing home delivery as their preferred mode of shopping when compared to click collect in September of 2020. Fast forward to December 2021, and 63% of surveyed consumers preferred home delivery, while 37% preferred click and collect methods9.
Beef is a big part of the success in this area, with 44% of consumers including beef in their online carts, and 25% of these consumers included beef within the last month10. This is up 7% since July 202110. As consumers continue to shift their preferences towards online based grocery shopping, retail businesses will continue to invest in hopes to fulfill these needs. Currently, grocery executives are expecting a continued interest in online shopping and have projected e-commerce penetration to more than double in the next three to five years9.
i Net intent is calculated by subtracting the percent of respondents stating decrease from the percent of respondents stating increase.
Figure 4. Beef Satisfaction at Home Versus at a Restaurant6
Not only are consumers purchasing beef online more often, but they are also happy with the experience they are getting. As figure 4 shows, 91% of beef roast purchasers claimed to be satisfied with the eating experience from the beef they purchased6. Similarly, 93% of beef steak purchasers claimed to be satisfied with the eating experience from the beef they purchased and 91% of ground beef purchasers claimed to be satisfied with the eating experience from the beef they purchased6. Additionally, when consumers are asked to rank various protein sources by satisfaction levels, beef has consistently been ranked as a top protein source6. Moreover, beef has been top ranked for versatility, protein density, taste, and overall nutritional content6. As shopping habits evolve and preparation methods shift to the household, providing a satisfying eating experience with beef will become paramount to healthy beef sales.
Figure 5. Market Share of Animal Proteins vs. Meat Alternatives5
The protein landscape, including meat alternatives, are continually monitored by NCBA, a contractor of the Beef Checkoff. As figure 5 shows, fresh meat alternatives represented less than 1% of both the entire fresh protein retail market (0.34%) and the fresh beef retail market specifically (0.54%) as of August 13, 20225. For comparison, beef currently occupies 54% of the fresh protein market, and occupied almost 56% of the fresh protein market during the same timeframe in 20215. Market share for alternative proteins has also been declining for the past two years, declining over 20% from 2021 to 2022 and declining almost 8% from 2020 to 20215.
Most consumers who choose to eat meat alternatives do not cut out other protein sources from their diets6. According to The Consumer Beef Tracker, an ongoing consumer survey managed by NCBA, a contractor of the Beef Checkoff, people who consume meat alternatives on a weekly-or-more basis also consume beef and other proteins as much as the average consumer6. Additionally, the current share of consumers entirely avoiding ground meat and only purchasing meat alternatives was estimated at around 3% between November 2018 – November 202011. Out of all households that purchased meat alternatives, 86% also purchased ground meat11.
Figure 6. Consumer Perceptions of the Nutritious Value of Different Proteins6
Along with a variety of other factors, such as eating experience, versatility, and price, nutrition continues to be a primary demand driver for consumer purchasing decisions. As figure 6 shows, consumers perceive beef as a nutritious choice, and even ranked beef over chicken for the second quarter of 20226. Beef has maintained this advantage since the second quarter of 2020 and continues to be considered a great source of protein in the eyes of consumers. According to The Consumer Beef Tracker, an ongoing consumer survey managed by NCBA, a contractor of the Beef Checkoff, over half of consumers (54%) consider beef to be an excellent source of protein, which is 20 percentage points higher than the ranking given to chicken6. These statistics indicate that consumers value the nutrient density of beef products, and an efficient source of quality protein.
Figure 7. Consumer Perceptions on Cattle Production6
NCBA, on behalf of the Beef Checkoff, continually seeks to better understand consumer perceptions of how beef is raised as a driver of consumer demand. As figure 7 shows, overall beef perceptions are strong, with 68% of respondents claiming a positive view on beef. Of those positive responses, 41% claimed to have strongly positive perceptions, with 27% citing some positive perceptions6. Additionally, only 13% of respondents claimed to have a negative perception of beef6. Looking specifically at beef production perceptions, nearly half of the respondents (42%) claimed to have a positive perception of beef production, with 37% claiming neutral perceptions of beef production, and 21% claiming a negative perception6. These two pie charts indicate that many consumers view beef in a positive light, but that some have concerns over cattle production.
Figure 8. Consumer Concerns with Cattle Prouduction6
When asked to describe any concerns related to beef cattle production, of the 51% of respondents who claimed to have a concern, animal welfare was mentioned the most6. Only 5% of respondents mentioned the environment as causing a concern, which suggests that consumers are more concerned with animal welfare than environmental concerns related to cattle production. These concerns can potentially be explained by a lack of knowledge consumers may have regarding cattle production methods and the various regulations in place to ensure animals are treated with respect and care. Currently, only 27% of consumers claimed to be familiar with how cattle are raised for food6. Consumers have also claimed that they believe veterinarians and producers to be a highly credible source of information when it comes to production practices6. This highlights the importance of industry programs such as Beef Quality Assurance and the emphasis producers place on animal care and welfare.
As 2022 ends, it is critical to monitor both opportunities and challenges consumers have in the marketplace. Consumers continue to enjoy beef in both retail and foodservice with high satisfaction ratings and have embraced convenient technologies like e-commerce. Sharing the industry’s commitment to animal welfare will continue to be important to consumers. Additionally, positive perceptions about the nutrition proposition that beef offers and the cooling of the meat alternative market, beef is set for strong consumer demand as a top protein.