Between high corn prices, growing international demand and the drought, the beef industry hasn’t been able to grow the herd for many years and has long been expecting supplies to grow tighter and prices to go higher.
In the throes of barbecue season, the mass media has been reporting on how consumers and retailers have been responding to the climbing prices.
The Wall Street Journal said that restaurants are taking two different approaches:
Many are passing along the higher prices while embellishing their menus with new items, smaller-portion cuts and more sauces, toppings and side dishes. Others are seeking to control costs by locking in beef purchases at current prices as they envision further inflation to come.
Supermarkets, on the other hand, are seeing consumers buying less costly beef cuts, the Journal reported.
This behavior is nothing new. SN has observed this trend of consumers trading down to more inexpensive cuts and cheaper proteins since the recession.
The Grand Island Independent reported last week that consumers will feel the pinch of the tight supply especially during holidays like the Fourth of July.
“While commodity price fluctuations are not always passed on to retail prices, American consumers will feel some significant market changes this Fourth of July,” Bill Cordingley, head of Food and Agribusiness Research at Rabobankm told the Grand Island Independent about rising prices for meat, dairy, beverages, snacks and vegetables.
The Grand Island Independent is one of many publications to report on how record high beef prices will translate to more expensive barbecues. This coverage could be causing consumers to make alternative plans for their Independence Day celebrations.
Supermarket retailers ought to take follow the restaurant industry’s lead and pair price increases with smaller portions and value-added additions such as marinades or premium ingredients.
This move benefits retailers twofold. Reseach has shown that consumers are looking for these types of products in general, as more households are starved for time and have smaller families.
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