Beef Taking Bigger Cut of Meat Sales

After years of watching health-conscious consumers defect from beef to leaner poultry and pork, cattle producers are reporting a turnaround: Beef’s market share of all meat sales edged up for the first time this year, halting a two-decade slide.

The statistics reported Tuesday are further evidence of what most Americans already suspect: Beef is back. Fueled by a combination of economic good times and a shift away from low-fat eating, sales and consumption are rising. The surge in demand is so dramatic that prices have gone up despite the fact that beef supplies are at an all-time high this year.

“The bottom line is, we’re selling more beef at higher prices,” said Randy Blach, market analyst for research firm Cattle-Fax, speaking at Beef Summit 1999, a trade show for retailers in New York.

Analysts credit part of the boom to an image make-over for beef, as popular high-protein, low-carbohydrate eating plans such as the Atkins Diet convince consumers that maybe beef isn’t a heart-attack-on-a-plate after all.

The booming 1990s economy is playing its part as well: Rising wages and low unemployment rates have made it easier for consumers to afford more expensive cuts of meat, analysts say, and to eat out more often.

“Beef is more income-sensitive than the other meats,” said Daniel Sumner, a professor of agriculture and resource economics at UC Davis. “When you’ve got some money in your pocket, you don’t say, ‘Let’s go out and have a chicken breast,’ you say, ‘Let’s go out and have a steak.’ ”

Consumer spending on beef increased 4% to $36.7 billion in the first nine months of this year compared with the same period last year, according to data from the Department of Agriculture. It is expected to rise even further as consumers prepare for the new year’s holiday.

The volume of orders has reached a record high at Omaha Steaks, a mail-order purveyor of prime filet mignon and New York strip steak, outstripping last year’s sales by 10%, the company said.

Beef consumption, which bottomed out at 65.3 pounds-per-person annually in 1993, at the height of the low-fat craze, has been inching up ever since and this year surged to 69.2 pounds.

After having been under attack for much of the early part of the decade, beef is once again being looked at in a more favorable light as high-protein diets gain in popularity, said food industry analyst John McMillin of Prudential Securities in New York.

“All the dietitians are telling us to eat the steak but don’t eat the bread,” McMillin said. “I laughed at first, but month after month this diet seems to be catching on. It’s helped bring beef back into a better light.”

Beef’s share of total consumer spending on meat edged up 0.2% to 40% this year, compared with 28.4% for pork, 27.4% for chicken and 4.2% for turkey. Beef’s gains came at the expense of pork and turkey, which showed slight declines.

Recovering exports also have helped beef sales, said Blach of Cattle-Fax, particularly in South Korea and Japan, which were hit hard by financial crisis just as American producers were putting record amounts of meat on the market.

To boost demand in this country, beef industry officials have taken a cue from the chicken business and focused on convenience. This year alone, 30 new precooked or microwaveable products have hit the market, including breaded beef tenders, cooked beef strips in a resealable bag for salads, and microwaveable pot roast. Although these quick and easy products only account for 4% of all beef sales, experts predict they will grow substantially in coming years.

The National Cattlemen’s Beef Assn. also is working to persuade supermarkets to begin arranging the butcher case by cooking method rather than by cut to help boost beef sales among novice chefs. “We’ve just found a way to present our product to consumers in a way they could understand,” said Chuck Schroeder, chief executive of the association.

Sumner and others predict that the beef boom will last for a year or two more at least, and that prices will rise further, especially as ranchers reduce production levels.

“It’s the best of times for the beef industry,” McMillin said.

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Beefing Up

A rise in beef consumption in the U.S. that began two years ago is helping beef in 1999 to reverse decades of market share declines against pork, chicken and turkey. Annual per-capita consumption, in pounds:

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Source: Cattle-Fax