What will drive beef demand in the years ahead? In short, start with the economy, then look at consumer preferences, and don’t forget to factor in the fairly unpredictable “media driver.” The answers can be surprising.
In a report titled “Assessing Beef Demand Determinants,” researchers point to four findings they consider to be of “elevated importance” in today’s beef market. Consumer incomes, not surprisingly, are expected to be a major driver behind the quantity of beef consumed. But, the relative impact of pork and chicken prices on beef demand is now considered to be economically small.
Certain types of media coverage can affect meat demand, with “an emerging area of negative impact” focused on climate change as it relates to the livestock industry. And, some demographic trends, such as growth of Hispanic and African-American populations, are considered favorable for beef demand.
Using those basic findings, how can the beef industry positively impact future domestic demand? One of the authors of the report, Glynn Tonsor, at Kansas State University, says a key area of opportunity is going to be the ability to “leverage the reduced price sensitivity and persistent demand for high quality to make strategic investments that reduce variability in beef quality traits, like tenderness and taste.”
Producers who invest in ways to enhance the end user’s eating experience will positively impact demand. He notes for cow/calf producers, that starts with making genetic selections that align with consumer desires.
The demand determinant study is financed by the Cattlemen’s Beef Board (CBB) using checkoff dollars and has generally been conducted about every five years. The annual CBB budget is between $38 and $40 million. This most recent study was released in January. It is authored by not only Tonsor but Jayson Lusk, at Purdue University, and Ted Schroeder, at Kansas State University. The cost of the study was $60,000.
The Beef Demand Determinant Study was commissioned by the Checkoff Evaluation Advisory Committee, a group made up of 12 producers. The study will be used to inform the Beef Industry Long Range Plan and checkoff-funded programs, and to evaluate work being done with beef checkoff dollars.
Jackie Means, chairwoman of the Checkoff Evaluation Advisory Committee and a CBB member, says this most recent study confirmed the importance of beef safety and nutrition, and also identified those product quality attributes — including taste, appearance, convenience and freshness — that are important determinants of demand.
She adds the 2018 study confirms findings from past studies and validates the direction of checkoff-funded research currently under way.
“The study offered a new perspective on segmenting consumer communications by ethnic preference, income, age and product type, as well as on partnering with other animal proteins,” Means explains. “The Beef Checkoff has collaborated with other animal proteins in the past and is open to new opportunities for future cooperation.”
DEMAND AND CONSUMPTION
One very important point in developing strategies to grow beef demand will be clarification of the role of per-capita consumption in beef demand. Per-capita consumption is, in effect, per-capita availability of beef. Demand, on the other hand, effectively refers to the quantity of beef that consumers will purchase at a given price, with all other factors held constant.
Study author Tonsor explains: “Beef purchasing decisions have become less sensitive to retail beef prices. While prices will always matter, this reinforces the importance of industry focus on beef-quality aspects of taste, appearance, convenience and freshness.”
In short, he says, both beef supplies and cattle prices increased in 2017 relative to 2016, an outcome only possible with demand growth.
He concludes: “A perpetual industry priority is to better understand and monitor beef demand, and to inform stakeholders, because demand directly influences overall industry success.”