Everett Griner talks about consumers not buying hamburger in the stores in today’s Agri View.
From: Meat and Poultry
Where’s the (ground) beef?
by Steve Kay, Meat and Poultry writer
Something is amiss with the US beef industry’s most ubiquitous product, ground beef. Sales have been weaker than expected for 18 months. That’s of deepening concern because ground beef as hamburgers and in all its forms is by far the most widely purchased beef item in the US at both the retail and foodservice segments.
Recent data reveal how important the product is.
Ground beef currently accounts for 55 percent of all beef sales in the US, with its sales divided 50/50 between the retail and the foodservice sectors.
At retail, consumers purchase twice as much ground beef as any other beef item. It accounts for 49 percent of total retail beef sales volumes and 39 percent of revenue.
At foodservice, ground beef accounts for 63 percent of volume and 37 percent of revenue.
Hamburgers account for nearly 30 percent of total ground beef use. Not surprisingly, three of the top five restaurant chains in the US are hamburger chains. Of the 400 largest restaurant chains in the US, hamburger chains account for 33 percent of total sales dollars.
This level of consumption means manufacturing boneless beef, the raw product used to make ground beef, is by far the largest single product at the wholesale level. It accounts for approximately half the total annual beef supply when both domestic and imported sources are combined. The majority of this manufacturing beef is processed into a number of ground beef products.
Theories abound as to why retail ground beef sales are performing poorly compared to years past. One is that consumers became a little tired of ground beef after having to trade down to it from more expensive beef items during the 2009-2010 recession. They began to eat more pork and chicken, especially as their production increased and thus became much cheaper than beef. Ground beef was no longer consumers’ “go-to” protein, even in hamburger form, analysts say.
Pork production in 2015 exceeded that of beef production for the first time (24.488 billion lbs. versus 23.700 billion lbs.). Chicken was far ahead at 40.085 billion lbs. Forecasts are for beef production to increase 3 percent or more this year. But pork production might increase another 2.5 percent, as might chicken production. So beef will remain third in terms of production.
It is becoming increasingly clear that pork and poultry are the proteins that compete primarily with ground beef, not beef whole muscle cuts, says economist Nevil Speer. “In other words, the retail beef case may be challenged most by pork and poultry in the ground beef section, not across roasts and or steaks. As such, we may begin to witness greater pricing diversion across the beef categories going forward in 2016.”