- Research Hub
Several factors are commonly known to impact demand, including consumer incomes, prices of substitute goods (other proteins in this case), availability of beef and other proteins, and consumer preferences. National Cattlemen’s Beef Association, a contractor to the Beef Checkoff, tracks many of these economic and industry metrics to fully understand Today’s Beef Consumer.
At the meat case, retail beef prices averaged $6.43/lb. in September 2023, which is up 7.4% from September 2022.1 Comparatively, retail pork prices have decreased by 0.2% and retail chicken prices have decreased by 5.1% over the same time frame.1 These retail price increases for fresh beef have helped support dollar sales, which have risen 4.3% from September 2022 to September 2023 despite a decrease in pounds sold over the same time frame.1 Pounds of chicken sold increased while overall sales value decreased, and pork sales decreased in terms of both pounds and sales value from September 2022 to September 2023.
Meanwhile, per capita consumption of proteins (a residual measure of protein supply put on a per-person basis) is expected to be a mixed bag over the next few years. Per capita consumption of beef is expected to decrease during the second half of 2023 and is projected to be down 2.5% annually from 2022.2 Per capita beef consumption is then expected to decrease 6.6% from 2023 to 2024 on an annual basis as supply crunches continue to affect the beef supply.2 Annual broiler per-capita consumption is expected to increase by 1.2% from 2022 to 2023 and then increase another 0.5% through 2024. Annual pork consumption is expected to increase by 2.5% from 2022 to 2023 and then remain constant from 2023 to 2024.2
These decreases in beef consumption are expected to continue through the end of 2024 and will likely provide little price relief in consumer markets. While retail beef demand has held steady so far, chicken and pork are positioned to potentially shift consumers away from beef due to their lower (and decreasing) prices.
REAL DISPOSABLE INCOME AND PERSONAL SAVINGS RATE, 2015 – 2023.
SOURCE: U.S. BUREAU OF ECONOMIC ANALYSIS, PERSONAL INCOME AND OUTLAYS REPORT, RETRIEVED OCTOBER 2023.
As the cost-of-living increases, it will be important to consider if consumer incomes are keeping pace. Typically, increasing discretionary income can be translated into a greater ability to purchase beef, making it a key metric for the beef industry to track. As Figure 1 shows, real disposable incomes have currently increased (albeit slightly) for 10 of the past 12 months, after decreasing for much of the latter half of 2021 and the former half of 2022. If this trend continues, consumers may begin to feel some relief from high prices.
However, throughout 2022 consumers struggled to direct money to their savings accounts, likely stemming from the various COVID stimulus/SNAP payments ending as prices began to climb.4 Because consumers spent more of their discretionary income on essentials, it is likely they were relying on savings and may still be doing so. In addition to saving less, the number of consumers making early withdrawals from their 401(k) accounts increased by 39% from the second quarter of 2022 to the second quarter of 2023.5 Credit card debt as a percentage of total household debt has also continued to climb, increasing in 7 of the last 10 quarters since the beginning of 2021.5 Because beef won’t see much price cushion on the supply side, a pullback in beef purchases in favor of cheaper substitutes may be looming in the future.
Consumer shopping and dining habits are also shifting as they express greater caution when managing their budgets and overall spending. Figure 2 shows that over the last six months, consumer spending increased on essential items such as groceries and fuel but decreased for discretionary items, including apparel, entertainment, leisure, travel, and dining out. In an effort to reduce expenses, a reported 40% of consumers are having more meals at home and plan to continue doing so, with approximately three-quarters of meals being cooked at home.6
SOURCE: STATE OF THE CONSUMER SURVEY, DESIGNED AND ANALYZED BY NATIONAL CATTLEMEN’S BEEF ASSOCIATION, A CONTRACTOR TO THE BEEF CHECKOFF. “THINKING ABOUT THE LAST 6 MONTHS, FOR EACH OF THE FOLLOWING ACTIVITIES, HOW HAS YOUR SPENDING CHANGED?”
CONSUMER SPENDING BEHAVIORS, 2023.
SOURCE: STATE OF THE CONSUMER SURVEY, DESIGNED AND ANALYZED BY NATIONAL CATTLEMEN'S BEEF ASSOCIATION, A CONTRACTOR TO THE BEEF CHECKOFF. "THINKING ABOUT THE LAST 6 MONTHS, FOR EACH OF THE FOLLOWING ACTIVITIES, HOW HAS YOUR SPENDING CHANGED?
Typically, consumer’s primary considerations for protein-based meals prepared at home revolve around taste and budget, indicating a preference for a satisfying eating experience while staying within their financial means.7 When purchasing beef products to prepare at home, chain grocery stores and mass merchandisers are generally the go-to destinations for consumers. Around 25% of consumers also choose to shop at club stores, although they do so less frequently compared to their visits to traditional grocery stores.7 One advantage of club stores is the opportunity to buy products in bulk, which can be a cost-effective option for those looking to stock up on beef for multiple meals.
Over the next six months consumers are expected to implement ways to stretch their budgets. As Figure 3 shows, nearly half of consumers plan to reduce their dining out frequency and actively look for deals or coupons, while one-third plan to stock up or freeze items and find creative ways to use their leftovers. Additionally, 25-30% of consumers intend to choose more budget-friendly options, such as opting for store or private label brands over brand-name products or shopping at more discount or lower-cost stores more often.6
The e-commerce marketplace grew steadily throughout the pandemic as consumers adapted their everyday lifestyles, especially when it came to shopping. Online shopping, including both click-and-collect and scheduled delivery, became very popular and has maintained viability but has lost some of the momenta of previous years. Most consumers currently use these platforms and services monthly, with three-quarters actively ordering meals and over half ordering groceries.6 Those who continue to use these services value convenience and find them quick and easy to use.6
Looking specifically at e-commerce trends within retail stores, consumers' online shopping carts primarily consist of shelf-stable items, such as soda, water, juice, frozen items, and various dry, boxed, or bagged food products. However, it is worth noting that 43% of online shoppers have included beef in their carts in the past month.6 The majority of those who included fresh beef in their online shopping carts were satisfied with their purchase, pleased with the quality and freshness of the beef, and had a positive experience with the service.6
Increasing costs of essentials have caused consumers to continue utilizing cost-saving measures. Online grocery shopping has lost some momentum with consumers but still remains a viable marketing option for beef sales. While consumers still report high satisfaction with beef consumption, price will remain a top priority moving forward. Given that beef likely won’t experience any price relief on the supply side, the main unknown for beef retail performance will be consumer demand. While demand for beef has held steady so far, several concerning economic clouds exist on the horizon that may challenge consumers at the retail beef section throughout the rest of 2023.