Beef makes a comeback on American shopping lists
After a decade-long decline, low prices, strong disposable incomes and a guarded thumbs up for the healthiness of red meat have combined to give beef a resurgence. USA TODAY
As backyard grills fired up for the Fourth of July, one thing is clear: Americans no longer have a beef with beef.
Thanks to lower prices, more disposable income and a guarded thumbs-up from the wellness community, the once-maligned meat is now seen by many shoppers and diners as an ingredient in a well-balanced and even trendy diet.
Americans ate an average 55.6 pounds of beef in 2016, up from 54 pounds in 2015, according to the Department of Agriculture. This comes after a decade during which U.S. beef consumption plummeted 15%.
For much of the decade, consumption sank as costs rose. Beef prices soared 50% between 2006 and 2016. Competing meats, like chicken and pork, rose in price, too, but not by as much.
Now, the golden age of meat has arrived.
"We’re in a much better place now than we were 10 years when we had the recession We've come out of that and industry has benefitted from that," said Altin Kalo, an economist with Steiner Consulting in Manchester, N.H.
The big reason is producers' costs have fallen dramatically for commodities like oil, needed to transport livestock, and corn, for feed.
Meat's popularity is expected to keep rising, with U.S. sales seen just shy of the $100 billion mark in four years, according to the market research firm Packaged Facts.
The burger is experiencing comeback, thanks to the rise of the craft version, which has trickled down to the fast-food industry, like McDonald’s new Signature Crafted Recipes. Once relegated to backyards on weekends, barbecue has become a movement all its own, complete with dedicated food trucks, citywide festivals and the honorific "pitmaster." Meat smoking has become a competitive art form and jerky is on-trend.
As beef has gotten cheaper, fast-food burger restaurants like McDonald's, Burger King and Wendy's have had greater leeway in discounting.
"That has driven traffic to those guys," said Will Slabaugh, an analyst with Stephens, a financial services firm based in Little Rock, Ark. "Cheap beef, in general, allows you to discount other things as well, because your costs are lower. That’s why you're seeing dollar drinks and coffees at McDonald's and $1.49 (chicken) nuggets at Burger King."
The trio of burger-driven restaurant chains is seeing 3% to 5% same-store sales growth year over year, while the broader restaurant industry's rate is slightly negative, he added.
Beef may be what's for dinner; it's also what drives profits for grocers and meat companies.
In supermarkets' meat departments, shoppers are finding lower prices and more variety.
"Demand has increased (and) that’s got to benefit retailers," David Livingston, a supermarket consultant with Wisconsin-based DJL Research, said, adding that stores with meat-cutters have even more to gain. "These are the kinds (of services) that differentiate supermarkets from sterile big-box stores."
Gross margins in perishables -- fresh meat, dairy and produce can run up to 40% of the purchase price, a lot higher than for packaged goods, typically up to 20%, he explained.
"Our insights show that meat consumption is growing slightly," Kroger spokeswoman Kristal Howard said, declining to share specific sales information.
Ahold USA, whose brands include Stop & Shop, Giant, Giant/Martin's and Peapod, also wouldn't discuss growth numbers. John Ruane, the company's senior vice president of fresh merchandising, only said that across the board, their meat departments are seeing "purchasing trends that align with the national meat consumption increase of +2.6 percent."
At Tyson Foods, beef represented 38% of its sales in fiscal 2016, compared with chicken at 30% and pork 11%.
"It’s a great time to be in the protein business," Gary Mickelson, a Tyson spokesman, said. "Rising demand for protein has led to a steady increase in meat consumption in the U.S. over the past five years."
The increase of meat-intense diets, such as paleo and keto, has also jump-started America's rekindled love affair with all things cow. Gone are the days of dismissing meat as a heart attack inducer or the unsophisticated grub of Middle America. Now, there's a premium segment that's lighting up diners, thanks to their increased demand for organic and grass-fed beef.
"For a while it was 'Hey, maybe you should just eat cereal and stay away from the burger.' After a while, the perceptions start changing," Kalo said. "Now, the issue is more on the sugar."
In the last three years, Michael Curry of Bismarck, N.D., has increased the amount of meat he eats. Beef — whether steaks, meatloaf, burgers, stews or pot roasts — now is his dinner every night and sometimes his lunch, too.
"I'm trying to live healthier and lose some weight. We have four boys and as you can imagine, they need protein,," said the 48-year-old assistant director of marketing at the University of Mary, a private Christian university.
Curry recently decided to switch to grass-fed beef and chipped in with friends to buy a slaughtered cow. Their half cost $900, including processing, and is expected to last a year.
"Americans like their meat, but I wonder how much of it is habit versus how much of it is conscious choice," he said. "Is it like baseball? Is it in our blood so to speak?"