Consumers Shift Toward Convenient Beef Options
Consumers shift toward convenient beef options
by John Lundeen, Executive Director, Market Research – NCBA
A great deal of debate swirls around reasons for the recent drop in the beef demand index. Recent research indicates that beef, largely steaks and roasts, are seen as less convenient in the consumer's mind, and consequently more difficult to fit into the lifestyle of many Americans. As consumers have shifted toward more convenient ground beef, a loss in economic value has occurred.
A slow, invisible change
Often there is not one piece of consumer research that clearly defines an issue, but several that allow one to read the tea leaves. One cannot ask consumers directly if convenience is an issue with beef, and get a reliable answer. Consumers may tell you that their lives are busy, perhaps busier than they have ever been, but not recognize this is slowly causing a shift in food choices. One can dig deeper and ask about the types of meals they serve in various situations, and hear about quick-to-the-table solutions such as frozen food, take out and ready-to eat options. And so, one less steak may be eaten every year, a rate of decline that the consumer isn’t even aware of. But over time, the decline becomes significant.
National Eating Trends, a service of the NPD Group, is a compilation of food diaries filled out by consumers in their homes for a 2 week period. As evidenced in Figure 1, looking at the data over time, one sees the slow drop in per capita "eatings" of steak (an "eating" is essentially a per person serving, and does not tie directly to volume). Because of increasing populations, overall grocery sales for beef appear stable. It is only when one looks at the data on a per capita basis that the drop in the frequency of steak consumption becomes evident.
Beef demand analysis
In this study a model developed by a team of agricultural economists from Purdue and Kansas State (James Mintert, Glynn Tonsor, and Ted Schroeder) at , was used to help quantify relationships among various changes in the consumption landscape and domestic consumer’s demand for beef. The study’s goal was to examine why beef demand declined sharply during the 1980s through the late 1990s, as well as examine the uptick in beef demand that took place in the late 1990s and early 2000s. Several key findings from the study standout. For example, a very significant relationship exists between consumer expenditures and beef demand. Simply put, as people have more income available and, hence more dollars available for expenditures, they buy more beef, and vice versa. Another interesting relationship was found throughout the 1990’s and early 2000’s. As more women entered the work force, beef demand declined, and chicken demand increased. This is believed to be a proxy for the need for convenient meal solutions, with a greater variety of quick serve chicken items better meeting the needs of the working woman. NET analysis substantiates the agricultural economists’ findings, indicating a significant loss on steak and roast “eatings” among working parents, and a shift towards ground beef within dual income families with kids.*
Shift toward ground beef
A recent checkoff-funded study analyzed the difference in the ability of 14 cuts to meet the most important needs of consumers. Consumers were allowed to cluster cuts based on whether they were similar or dissimilar, and then to rank order the cuts based on key attributes. Ground beef items were found to be the "most convenient" in this analysis. Many popular steaks were noted to be family favorites, but rated lower than ground beef on convenience attributes. Additionally, two sources of sales data document a shift in sales toward ground beef over time. The first source is grocery scanner data, which documents a 3 percent shift in pounds of ground beef sold, from just over 43 percent of beef sold in 2003 to just under 47 percent in 2008-2009. Foodservice has shown a more recent 2 percent shift towards additional ground beef sold, which is most likely due to the recession.
The resulting impacts of this consumer shift from steaks and roasts to ground beef is both monetary and volume-driven. A per head value can be placed on this shift. Likewise, a comparison can be made to the total loss of "eatings" if consumers today were still eating beef as often in-home as they were a decade ago.
In the last decade, the average American is consuming 6 fewer "eatings" of beef. Using a mid-point population size of 250 million, one can calculate a total loss of potential eatings of 1.5 billion. This represents a loss of 7 percent of potential "eatings." Note that this loss cannot be fully attributed to convenience. The price of beef, and nutritional perceptions associated with beef certainly played a role. The drop-off in consumption is seen even within the "working parents" segment, families with dual incomes.
The shift toward ground beef consumption is interesting in that nutritional perceptions are less likely to be driving the change, since ground beef does not have a nutritional halo relative to steaks and roasts.
Thus, this economic loss is more clearly tied to convenience or price concerns. Industry mandate Over time, consumer eating behavior evolves. For example, a few more meals prepared in the microwave mean the deli, prepared foods and frozen foods sections of retail stores gain traffic. This shift is supported by a long-term downward trend in the minutes devoted to preparing a weekday dinner that has also been documented. Although there isn’t one beef product solution that will enhance beef ’s ability to compete in an environment demanding greater convenience, there are several qualities these products must deliver against from a culinary, product and distribution angle:
- Culinary mandates
- Use the appliances that are the go-to solution for convenient meals, with the microwave being especially important
- Provide recipes requiring fewer steps and easily accessible ingredients
- Products should be packaged in ready-to-use "portions"
- Distribution mandates
- Easily located in areas of the store where consumers look for quick solutions
2009 Beef Demand Determinants Study
2009 Beef Value Determinants Study
FreshLook and 2009 Foodservice Volumetric Study
*Mintert, J., Tonsor, G., and Schroeder, T. (2009). U.S. Beef Demand Drivers and Enhancement Opportunities: A Research Summary. MF-2876, Kansas State University Agricultural Experiment Station and Cooperative Extension Service.
Tags: Beef Issues Quarterly, Spring 2010, Trends Analyses
June 30, 2010