Ground Beef Challenges
by John Lundeen, Senior Executive Director, Market Research, National Cattlemen’s Beef Association, a contractor to the Beef Checkoff
In the last Beef Issues Quarterly, an article explored whether lab-grown meat and ground crickets are potentially a challenge to ground beef. Beyond these more exotic choices, the article also considered the percentage of consumers that may seek out a closer substitute to ground beef, such as a plant-based-option product derived from soy and chickpeas. In conclusion, that article noted that there isn’t a hue and cry among consumers for these alternatives.
This article will look at more direct challenges to ground beef demand, and discuss needed industry actions. This article is written in recognition of the importance of ground beef to the beef industry, with close to 60 percent of current beef volume domestically reaching the market as ground beef.1
For the first six months of 2016, additional beef moved through the grocery channel. Interestingly, there was a small shift in the type of beef purchased, with an increase in steak and roast volume, and a 3 percent decrease in ground beef. This led to additional analysis by the market research and intelligence department, to investigate the consumer forces behind ground beef’s small sales shift. The rationale was to determine if market fundamentals for ground beef were evolving.
In addition to in-depth sales analysis, two checkoff-funded studies have recently been run by the market research department, one exploring ground beef purchasing in fast food restaurants, and the other focused on in-home ground beef usage. Both suggest that a minority of consumers are shifting their ground beef eating habits. Note that other tracking of the consumer over the last three years documents that 15 percent of consumers expect to see their “beef” usage increase while 17 percent intend to eat less beef. This provides important context - we have always seen segments of consumers adopting increased or decreased usage of beef products. A significant amount of analysis has been conducted on the reasons behind the intended shift up or down in beef consumption. One should also recognize that as recently as 2014, an estimate of burger consumption showed a record 14 billion estimated as consumed, combining in-home and foodservice consumption.5
Drivers of Change in Ground Beef Usage
The following is a list of the reasons given for changes in ground beef consumption noted in the two ground beef studies recently completed. It combines the reasons given in the two studies for changes in consumption and solutions to stimulate increased demand, ranging from nutritional perceptions, trading up actions, convenience issues, lifestyle changes and quality concerns.
Further Detail on Drivers of Change
Historically nutrition has been the greatest challenge for the beef industry impacting planned consumption levels. Consumers are concerned about fat, cholesterol and calories, and beef is seen as a choice to restrict. The same was true in the two studies recently run concerning foodservice and at-home ground beef purchase intentions; nutrition was the number one reason to cut back on ground beef.
- The primary reason given for gravitating to chicken products in fast food burger restaurants is nutrition.2
- Scanner data indicates the primary ground product competitively in grocery stores is ground turkey (long-term). This product is perceived by the consumer as being healthier.1
The industry has strengths here that must be emphasized, head-to-head nutritional comparisons of ground beef to poultry products should continue to be emphasized. The industry is producing a range of ground beef products for the consumer, including lean (90 percent lean or better) and extra lean (96 percent lean or better) options that compare very favorably nutritionally to poultry products. Before the recession, leaner ground was becoming more popular. Then, as the recession struck, sales shifted towards less lean, more price-competitive product. In the first six months of 2016, 70 – 77 percent lean product showed scanner sales declines while higher lean products (78 – 84 percent, and 90 – 95 percent lean) showed an increase in sales.
The second most noted reason for decreased use of ground beef in-home was price (“too expensive” or “other proteins being more affordable”). The Consumer Beef Index, a semi-annual tracker of consumer perceptions has shown over time that chicken enjoys a strong lead over beef on value perceptions.4
Trading Up to Better Quality
Although it is too early to tell if this is a long-term trend, consumers recently are buying a better steak or roast to serve in-home. Scanner data from the first six months of the year showed strength in T-bone, porterhouse, strip and petite sirloin steak sales. (1) The third most significant reason given in the fast food survey for eating less fast food burgers was a migration by the consumer to burgers served at more expensive locations. (2) Note however that the overall sales of fast food burgers still dwarfs higher priced competitors. In other millennial restaurant research, a propensity to dine at a local “independent” has been noted.
Consumers do not note convenience as an issue with using ground beef. However, in the Ground Beef Usage study, a range of solutions were tested to determine what might stimulate demand for ground beef; enhanced convenient packaging solutions did very well.
Consumers are shifting some of their meals to in-home, including those in the millennial generation. Part of this is based on nutritional desires, as the consumer believes they can prepare a more nutritious dish at home than is traditionally served at a restaurant.
The number one reason for eating less burgers at fast food restaurants was simply “not eating as much fast food.” Note that quotes from the study indicated that major drivers of this trend were a desire to be healthier, to save money by eating out less, a trend to eat more often in-home and the desire to lose weight.2
Quality concerns surfaced as the third most quoted detractor to usage in the in-home ground beef study. A range of perceptions were noted, including concerns about safety, lack of freshness, and questions about additives or fillers being used.3
The primary enticers to eat more fast food burgers were knowing that the beef is fresh, more nutritious side dishes and the use of leaner beef.2
If one considers all of the factors above, there are several other meat protein products that are gaining interest at the expense of ground beef. Among the 29 percent of consumers who noted cutting back on their ground beef purchase for in-home use, the following proteins were noted as being “purchased instead.” Note that very few people noted eating less protein overall (7%); and 41% noted shifting to beef steaks and/or beef roasts.
Ground beef is a wonderful product that meets consumers’ needs. Over the last several years sales have climbed, helping to power incremental industry revenues. Due to the sheer scale in volume and dollars of ground beef sales, ground beef will draw competitive attention. The industry must continue to stress the taste, versatility, nutritional benefits and overall value of ground beef.
- IRI/Freshlook, Total US MULO, Jan – May 2015 ending 5/24/15 and 2016 ending 5/22/16, Categorized by VMMeat System
- Millennial Listening Panel, Fast Food Burgers Study, 2016
- Ground Beef Usage Study, 2016
- Consumer Beef Index, Spring and Summer Waves, 2016
- Source: The NPD Group / CREST
Tags: Beef Issues Quarterly, Fall 2016, Research Findings
October 11, 2016