The stats are in and Memorial Day weekend beef sales were disappointing, not exactly the great kickoff to the summer grilling season we wanted. More of a pooch punt on third down, giving the beef industry a few more months before handing off our long-time center of the plate summer dominance to other proteins. Observers suggested stormy weather on the East coast, plus historically high prices, were two major reasons for all those “no sale” register ring ups at the local A&P or Piggly Wiggly.
Fortunately the Memorial Day weekend isn’t to beef producers like the Christmas season is to toy manufacturers. The weather will always get better – and worse – so we have plenty of time to make up for issuing a ‘May Day’ distress call on May 27. The real sales killer that must be addressed, of course, is the price of a pound of beef.
What will American beef eaters pay this summer? Let’s look at this week’s specials, knowing that these prices will rise from time-to-time. Here in the Midwest, Hy-Vee is selling Amana Choice KC strips for $6.99 each. To be more accurate, a 12 ounce cut is $10.48 or $13.95/pound. Fresh ground beef (85/15) is $3.99/pound.
Those weather-beaten folks on the East coast will pay about the same to shop at their local Piggly Wiggly. Their Charleston, SC, store is advertising ground chuck at $4.89, C.A.B. New York strips at $12.99, and boneless sirloin at $8.99. A look at the weekly ad for Ralph’s Groceries in San Diego made me think they’ve decided to ignore their red meat department. A 16 page flyer mentioned just U.S.D.A. Choice T-bone at $8.99 and lean ground beef (80/20) at $3.49. Prices for both of those items were available to store card holders only. Chicken and that ‘other white meat’ took up the rest of the meat department ad space.
The average price of a pound of ground beef between 1984 and 2003 stayed under $2.00/pound, making it one of the biggest bargains to ever land on the center of the plate. It started to creep up, though, and first touched $2.50 in 2010. The $3.00 barrier was breached just one short year afterwards. This Memorial Day, it spiked at an all-time high of $3.51. If you consider that most retailers say ground beef is the single most price sensitive product in the meat case, you’ll understand why that long holiday weekend was a major under-performer.
Here is more reason to fear for the future of the beef business. In 1984, the per capita consumption of beef was 63 pounds, down about one third from its peak of 94 pounds in 1976. As the price of beef began trending upwards, consumption followed a downward slope, dropping to just 55 pounds last year.
Those historically high prices were caused by wholesale beef prices, jacked up by one of the worst droughts in a century and drought-driven record high feed costs forcing a reduction in herd size. We now have the smallest number of U. S. cattle since 1952.
With the genetically limited time lag needed to make a substantial dent in beef supply, retail prices just before the next three grilling days - Father's Day on June 16, the Fourth of July and Labor Day on September 2 – will probably stay in the same high-dollar neighborhood, maybe even jump higher by summer’s end. It’s not inconceivable that ground beef might flirt with $4.00 by Labor Day.
With prices rising so quickly, whole muscle beef cuts are no longer in danger of being declared an indulgence by most people. That deed has been done and the shift to ground beef is part of the reason it’s reached record-level retail prices, too. If it hits $4.00 within the next 12 months, ground beef will also be in danger of becoming an indulgence for at least the bottom quarter of the income scale and a financially-driven replacement of the whole muscle cuts favored by what’s left of a staggering middle class.
The message that it’s healthier to eat less meat will gain more credence along with the idea that red meat might not belong at the center of the plate anymore. The idea that meat should be an ingredient, not a main course, will take hold and the new supermarket growth item will probably move to the center of the store where they keep all those varieties of Hamburger Helper®.
Take fair warning: Hamburger Helper now comes in 40 varieties including Chicken, Tuna, Cheesy, Italian, Asian, Mexican, Whole Grain and Helper Complete. The “Hamburger” part of that brand name is no longer where Betty Crocker is going. Could it be because they know that’s not where their customers are going?
Increasing herd size will help mitigate spiraling prices but that would require a major commitment on the part of cattlemen to take the risk and that’s far from certain. The next hurdle, if enough cattlemen decide to take that great leap of faith, is the time it would take to actually rebuild our herds. It would be over three years before enough inventory would be on hand to allow prices to drop. The great unknown there is how much red meat a suddenly wealthy and huge Chinese middle class will consume. As they begin to demand more and more meat in their diet, there might not be enough resources available anywhere in world markets to keep prices at the low levels we’ve come to appreciate.
But three years is more than enough time for the current generation of would-be beef eaters to opt out. Permanently.
The opinions expressed in this commentary are solely those of Chuck Jolley, a veteran food-industry journalist and commentator.