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Price Convenience Eating Quality More Important than Production History for Beef

05 March 2015

Changes in the US economy, during the recession and its aftermath, have had a significant impact on beef consumers’ ideas about the importance of value and quality.

As the beef industry continues to place greater emphasis on end-user need and desires, it has become increasingly important to recognise these consumer desires and trends both at the foodservice and retail level, according to a study by B. Harsh and D. VanOverbeke from Oklahoma State University.

The beef industry has responded to the growing desire for high-quality beef through genetic improvement and breeding changes designed to increase the percentage of cattle grading USDA Choice and Prime.

Much in the same way, retail and foodservice segments have responded to a diverse set of consumer trends driven by consumption patterns, flavours, convenience, health and wellbeing, as well as a variety of newer, socially conscious issues including animal welfare and environmental sustainability.

The US cowherd has been in decline for the past 50 years.

While this decline is in response to numerous external factors, the trend has only been accelerated in recent years by severe droughts that have plagued major cattle states reducing the US cow supply by 8.5 per cent (2.76 million head) from 2007-2012 (Corah, 2013).

Although producers have felt the pressures of economic change for considerably longer, the 2009 collapse of the U.S. housing market and following recession directly affected consumers and their meat purchasing habits.

Even as late as 2013, among consumers who changed their meat purchases, 91 per cent were spending less (FMI and AMI, 2014). However, data from the 2014 Power of Meat survey may show signs of a return to pre-recession levels.

Increased consumer spending and decreased importance of price show a willingness to ease up on money-saving measures adopted during the recession.

Despite the recession, demand for high quality beef has continually risen and had obvious effects on the quality of the already low feeder cattle supply.

The beef industry has now seen a 12 percentage-point increase in carcases grading USDA Prime and Choice since 1995 (Dykstra, 2014). The USDA Prime and Choice tonnage has increased by 5.7 percentage points in 2014 compared to 2013 (Dykstra, 2014).

This quality increase obviously did not occur on its own. While it comes as no surprise, producers have sought to offset costs and fill the supply gap through increased carcass weights.

Producers have also done more to ensure cattle are hitting the quality targets demanded by consumers. One tool that’s played a large role in accomplishing this goal, among others, is the National Beef Quality Audit (NBQA), an industry-wide evaluation of quality conformance developed in 1991.

The 2011 NBQA focused on quality challenges including consumer eating satisfaction, carcase weights and cattle genetics, all industry aspects hugely important in growing the USDA Prime and Choice quality mix.

Given the trend toward increased carcase weights, maximising genetic potential has become an incredibly important tool in the production of high-quality beef.

Through the utilisation of Expected Progeny Differences and genomic tools, the Angus breed has led the charge for improving the genetic capability of US feeder cattle.

In fact, the 2011 NBQA showed among feeders, packers and retailers, “black-hided” was the phrase most associated with “genetics” (Igo et al., 2011).

The increase in cattle grading USDA Prime and Choice, among numerous other factors, has had an effect on the way beef is marketed today. And despite rising beef prices, it remains a staple at the US dinner table.

The Consumer Beef Index (CBI) gives some insight into why this is happening.

The majority of consumers today still say beef isn’t too expensive (Pelegrin, 2013).

But most importantly, 72 per cent of consumers listed beef as their first or top choice of proteins in 2013, a percentage that’s only grown since the CBI was first conducted in 2007 (Pelegrin, 2013).

When cost is factored in, consumers ultimately believe the price reflect beef’s value and continue to vote with their dollars for beef’s flavor, juiciness, tenderness and versatility.

The study concludes that consumers will continue to increase grocery expenditure with the increase in price in many food items.

While there is an increase in meat expenditure, the researchers ask what price will become too much for consumers to pay for beef.

A recent FOODS survey (Lusk, November 2014) indicates that consumers’ willingness to pay for meats, other than steak, continues to increase and that steak remains unchanged.

In addition to concerns over price, consumer surveys across the board have sent mixed messages about consumers’ wants and desires for more information about management practices and other on-farm production techniques (including technologies).

They say that while this is true, nearly every survey indicates that price, convenience and eating satisfaction are still more important than production history and other information

Further Reading

You can view the full report by clicking here.

February 2015

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