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Retailers Cope as Beef Prices Hit All Time High

By Lucas Witman

As the first days of summer began driving outdoor cooking enthusiasts to load up their grills with hamburgers and T-bones this year, many consumers were taken aback by the high prices of these seasonal staples. The price of beef nationwide hit a record high in June, with the national average price for steak standing at $4.81/lb. and the average price for ground beef reaching $3.51/lb. With prices still on the upswing, many consumers are being forced to consider switching to more inexpensive proteins.

The reason for rising beef prices is multifarious, according to Ty Freeborn, Owner and CEO of specialty beef producer Steakhouse Elite. “You’ve obviously got higher input costs, from corn to fuel,” said Freeborn. “More importantly, you’ve gone through six to eight years of drought in the largest cow producing part of the country.”

Over the past several years, as drought has plagued much of the country, the price of cattle feed has risen as well. As a result, ranchers have been forced to reduce the size of their herds. The reduction in herd size has led to an overall reduction in beef supply, in turn effecting a rise in prices. “There just aren’t the mother cows left to produce a calf every year,” Freeborn said.

There is little indication that cattle stocks will be replenished to pre-drought levels in the United States any time in the near future. “Historically, this trend is only headed in one direction,” said Freeborn. “I don’t know if you’re ever going to see America’s cow herd turn the corner and start growing again.” In short, higher beef prices are likely here to stay, and this is a reality to which consumers, retailers and the beef industry itself are going to need to adapt.

The good news for those invested in the marketing of beef is that consumers do not seem prepared to abandon the protein altogether, regardless of its rise in price. “Most consumers are staying in the beef franchise. They’re continuing to be customers,” said John Lundeen, Executive Director of Market Research for the National Cattlemen’s Beef Association. According to NCBA research, just 24 percent of today’s consumers are eschewing steak altogether, because of price, and only 16 percent state that they are abandoning ground beef for the same reason. This means that the majority plan to continue to purchase the protein.

Although consumers may not be prepared to drop beef from their dinner plates, beef retailers and the industry itself will need to shift the way they reach out to these individuals if they are going to keep them coming back to the meat case. It will be increasingly important to identify what exactly shoppers are looking for when it comes to purchasing beef and to change the product accordingly.

According to NCBA research, the top three things consumers are looking for when making meat purchases is a longer shelf life (48 percent), freshness (46 percent) and freezer-friendly packaging (37 percent). In short, the same old plastic wrapped Styrofoam containers simply are not cutting it any more when it comes to satisfying consumers’ desire for a fresher, longer-lasting, freezer-friendly product.

“Extended shelf life packaging takes on importance,” said Lundeen. “With higher priced inventory, you have to take action to minimize shrink.” One company that is working to innovate beef packaging is Sealed Air’s Cryovac®. Cryovac is bringing vacuum seal technology to the meat case, offering beef purveyors a new type of packaging that helps the product stay fresher longer, that can be placed immediately in the freezer without transferring containers, that risks fewer leaks and that is more environmentally sustainable. “We know there are benefits here for the consumer for this packaging type,” said Lundeen.

The team at Cryovac acknowledges that effectively marketing vacuum sealed beef to a consumer populace that has always purchased their meats in the same type of packaging will require some work on their part, as well as on the part of retailers themselves. “Education on the features and benefits of vacuum packaging can change consumer perception,” said Jerry Kelly, Food Retail Expert for Sealed Air’s Cryovac Brand. “The more consumers know about the features and benefits of vacuum packaging, the more definite intent to purchase increases.” According to Kelly, after being educated about this new packaging, 76 percent of consumers were more likely to purchase vacuum packaged beef, with 58 percent much more likely.

Of course, it is not only the consumer that must be educated about the new packaging, but those who work behind the meat case as well. “We talk about education. We need to educate meat department people as well,” said Kelly. “We’re committed to helping retailers.”

While Cryovac is working to satisfy the growing consumer demand for a fresher, longer lasting product, Steakhouse Elite is responding to another prominent desire of those purchasing beef. For Freeborn, his company’s success is based on satisfying customers by giving them a product that is worth every penny they spend on it.

Steakhouse Elite specializes in American Kobe-Crafted beef, a high end product that outshines its competitors in the meat case in both taste and texture. “American Kobe-style beef has a unique texture and flavor that just can’t be matched,” said Freeborn. “People try to build a better burger by adding toppings and sauces. We made the burger itself better.”

Freeborn argues that grocery shoppers today are willing to spend a little more on beef if his company offers them something that they feel merits the cost. “It is bringing a lifestyle upgrade along with it,” Freeborn said about Steakhouse Elite’s Kobe-style beef. “People are buying into a better way of life for a few bucks. People like that.”

Still, regardless of what retailers and beef suppliers do to reach out to consumers, it is inevitable that for the time being some will eschew high priced red meat for less expensive protein options. According to Freeborn, there is little more that the industry can do to market beef to this group than wait for perceptions to change. “If you used to be able to buy a pork chop for $1.50, and now you see the pork chop for $3, you don’t see value in that,” he said. “It’s going to take a while for consumers to get used to it. It will take a little time for consumers to adjust.”

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