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There’s no doubt that these are
penny pinching times. Consumers are downsizing about every
purchase imaginable – from new cars and vacations to dining out.
And while dinner at a fancy restaurant may seem worlds away from
your ranch, the filets and steaks on the menu relate directly to
the beef industry. During
the first few months of 2009 a survey conducted by the National
Restaurant Association confirmed that, while sales lag across
all restaurant concepts, the fine-dining and family-dining
segments have been hit particularly hard. Just 8% of operators
in the fine-dining concept reported higher sales than the
previous year.
The recession is also being felt
in the meat department at the grocery store. A joint study by
the American Meat Institute and the Food Marketing Institute
released in early 2009 indicated that the economic woes are
affecting where people shop for meat as well as the kind of cut,
brand and quantity purchased. Most commonly, consumers are
switching to less expensive cuts like ground beef.
As a result of these changes,
Marcia Mogelonsky, a research analyst for the consumer product
marketing firm Mintel, says consumers are making a major
lifestyle change, and she says, “Food companies are going to
have to change as well in order to survive – particularly how
they connect with consumers.”
What will the beef industry need
to do to keep beef on the dinner plate? Here are some of the
trends to track:
Dining In. The number one trend
emerging for the future is the fact that more consumers are
eating at home instead of dining out. Recent studies show that
the average family has five dinners at home per week, with an
average of 3.9 of those meals including a meat item. Chicken and
beef are the top meat choices.
And though beef sales are
suffering at the restaurant sector, the “dining in” trend is
positive for retail. “We’re seeing more demand for beef in
retail as consumers are cooking more,” Meghan Pusey, Associate
Director of Communications for the National Cattlemen’s Beef
Association said in a statement to the press. “Beef sales were
up by 5.8% for the fourth quarter of 2008 – a 3.2% increase in
pounds sold, and up by 2.2% for year-end 2008.
Consumers can stretch their
dollar with the endless meal possibilities beef offers.”
Specifically, sales of middle meats like steaks were up 9% and
grinds were up 20%. This indicates that consumers still want a
high quality eating experience, but are doing it at retail with
steak purchases that they can make at home rather than paying
the higher price of eating out.
Convenience Still Needed.
However, just because more people are dining at home doesn’t
mean they have time to cook – and thus offering convenient
products is still critical for the beef industry.
As an example: For every new
convenience beef product introduced, poultry releases 1.6 new
products. That’s why the Beef Checkoff Program has increased its
focus and resources on development of new convenience products
in recent years. Case-ready (prepackaged) meat sales have seen
steady to increased sales during the recession – but more
convenience beef products are needed.
Buying In Bulk. Along with the
dining in trend, more consumers are buying food items like meat
in bulk. In fact, the only appliance to see a surge in sales in
2008 was the freezer. Food industry analysts say consumers see
the freezer as a means for stretching their food dollar during
the current recession. “It allows consumers to buy items that
are on sale in bulk and freeze them,” says NCBA’s John Lundeen.
Price featuring for beef in
supermarket ads is one way to promote buying in bulk and help
beef maintain market share.
Grocery Take Out. Research now
shows that America’s laregest takeout casual outlet is not a
restaurant. It’s a national supermarket chain. With grocery
retailer’s average meal price being half the cost of a
restaurant meal, this trend is being driven by the economy – and
the consumer’s desire for eating out. It also means the beef
industry needs to continue developing take-out products that can
compete with the rotisserie chicken and oven-fresh pizza. One
recent example is a rotisserie-style meatloaf introduced by
Certified Angus Beef to compete with rotisserie chicken.
Health & Wellness. More consumers
are showing interest in health and wellness information – and
this means the beef industry must get proactive about sharing
beef’s positive nutrition story. The recent checkoff-funded
research study entitled “U.S. Beef Demand Drivers and
Enhancement Opportunities” conducted by Kansas State
University’s James Mintert and Ted Schroeder, and Michigan State
University’s Glynn Tonsor found that beef demand benefits from
increasing published information regarding health benefits
associated with zinc, iron or protein in diets. Studies show
that beef demand also responded positively to extensive
publication of information promoting Atkins, high-protein or
low-carb diets.
However, beef demand declines
when articles are published linking diet and fat consumption to
cholesterol, heart disease or arteriosclerosis.
Thus, Mintert suggests the beef
industry must continue to promote the healthy attributes of
beef.
Additional Considerations
While quick-service restaurants are still seeing steady
sales – which helps maintain beef demand, special meal deals and
couponing are likely going to be needed to drive consumers to
higher priced restaurants. New menu items will also be key in
attracting customers – and the beef industry must be proactive
in helping develop such items, food industry experts say.
The industry needs to continue telling positive stories of
caring for the land and livestock. The issue of animal welfare
is a contentious one and consumers need to connect with real
beef producers.
Food safety must also stay top of
mind. Not surprisingly, food safety recalls adversely impact
domestic and foreign consumer demand for beef. Beef food safety
recalls jumped from 18 in 2006 to 38 in 2007. That rise alone
contributed to a 2.6 percent drop in domestic retail beef
demand, the recent Beef Demand Drivers study concluded.
Millenials – those born between
1980 and 2000 and are currently ages 8-28 – are 83 million
strong and represent a large sector of future beef consumers.
The industry needs to begin attracting them to beef products –
and that will likely take a more youthful marketing strategy
such as tools like the Internet and Facebook.
Last but not least, in this quest
to maintain – and eventually grow – beef’s market share in the
changed economy is the focus on taste.
Kansas State University economist
James Mintert says, “In 2009 US beef demand will be hurt by the
weak US economy, and there’s not much our industry will be able
to do to stop it.”
But, he continues, “We don’t want
to give consumers non-price reasons to walk away from our
product…The industry must keep quality and beef safety up.”
And he adds that the beef
industry should focus on being positioned to take advantage of
the US economy when in begins to rebound in 2010 and 2011.
Mintert concludes that the key
for the beef industry is to provide consumers with products that
meet their needs – which is a beef product that is nutritious,
flavorful, tender, safe, healthy and convenient.
California Restaurants Among National Beef Backer Award
Winners
The National Beef Backer Award winners in foodservice were
announced in late January by the Beef Checkoff Program at the
Annual Cattle Industry Conference in Phoenix, AZ. The Beef
Backer Award recognizes chain and independent restaurant
operators who excel in menuing and marketing beef.
This year’s national winners
included Cattlemens Restaurants (Santa Rosa, CA) in the
“Independent” category, Charlie Brown’s Steakhouse
(Mountainside, NJ) in the “Chain” category and Merriman’s
Restaurants (Kamuela, Hawaii) as the “Innovator of the Year.”
The Independent winner, a regional chain with eight locations in
Northern California, was founded in 1968 by ranchers Pete
Gillham Sr., and Pete Gillham Jr.
Cattlemens Restaurants reflects
the values that these ranchers brought to the restaurant
business, featuring the best cuts of beef, served simply and in
generous portions in a charming Western ambiance.
John Frenzel, marketing director
for Cattlemens Restaurants, says, “With a mouthwatering menu,
innovative beef promotions and a dedication to satisfying
guests, Cattlemens Restaurants has remained a place where
tradition has outlasted the trendy.”
Cattlemens stands out by
emphasizing value and service. “In today’s economic climate,
customers still demand high quality, which is why all steaks at
Cattlemens are hand-cut on premise the same day they’re served,
then grilled to perfection,” Frenzel says.
Restaurant operators interested in entering the 2009 Beef Backer
contest should contact their State Beef Council.
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