Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=218052
Story Retrieval Date: 7/24/2014 12:44:44 PM CST
Put off by rising beef prices, consumers are turning to alternative proteins.
With beef prices rising, people turn to chicken
Data from USDA shows that beef retail prices are on the rise.
SUMMARY: Rising beef prices last year led U.S. consumers to turn to less-pricey pork products, and in 2013, the trend is expected to continue with chicken becoming an even more appealing option.
Rob Levitt of West Town-based The Butcher & Larder thinks the butcher shop has an advantage when it comes to rising national beef prices.
“Someone will come in and will be having a cookout for 10 people. Rib Eye can be too expensive of an option if you’re cooking for that many people so we help them find an alternative cut.”
The whole-animal butcher shop offers a variety of beef options beyond the “supermarket cuts.” That means customers can find beef cuts at a price they can afford. Butcher & Larder also buys locally.
“Because we buy directly from small family farmers, [prices] stay steady,” Levitt said.
Rising beef prices last year led many U.S. consumers to turn to less-pricey pork products, and in 2013, the trend is expected to continue with chicken becoming an even more appealing option.
“Data shows that the Top 500 full-service operators have already started offering fewer beef dishes but more less-expensive pork dishes over the past year,” said Technomic Inc., a Chicago restaurant-consulting firm, in a recent report. “This trend is poised to continue in the coming year with operators offering more chicken, vegetable-based and other entrees that cost less to prepare.”
February data from the U.S. Department of Agriculture shows continued evidence that the 2012 drought has led to historically small herds of cattle and calves and reductions in the number of cows and heifers that have calved.
As of Jan. 1, cattle and calves in the U.S. totaled 89.3 million head, a 2 percent reduction from 90.8 million a year earlier.
“This is the lowest Jan. 1 inventory of all cattle and calves since the 88.1 million on hand in 1952,” the USDA said.
“What this means is there is less beef available for the American public,” said Jay O’Brien, former board member of the National Cattlemen’s Beef Association and former chair of the Cattlemen’s Beef Board, in an interview.
O’Brien also is concerned the problem doesn’t have an immediate fix. Heifers, or young cows that have not yet borne a calf, are two years away from being able to increase the beef supply, according to his calculations. This significant amount of time is largely due to the heifers’ nine-month gestation period, the fact that they won’t breed until they are at least one year old and the residual effects of the drought itself on the agricultural industry.
The effects of the prolonged drought mean a couple of rainstorms won’t be enough to solve the problem.
“Even if it starts raining, it will take a while for a lot of this grass country to recover. It does not happen immediately,” O’Brien said. “The country has been hurt badly enough; it takes awhile for the grass to get healthy again.”
More than two-fifths of the 1,500 consumers polled by Technomic said that a price increase of $1.50 to $2 on a beef dish at a restaurant would be enough for them to change their ordering behavior. Consumers said they would order beef items less frequently or dine out less often.
Technomic found that pork prices are slightly increasing as well. A quarter of consumers indicated that they have noticed an increase in the price of pork dishes at restaurants. However, for now, fewer than a fifth of consumers agreed that they are ordering non-pork dishes such as pasta or chicken more frequently when dining out to save money.
“We are seeing more alternative proteins in greater demand on menus across the board,” said restaurant industry analyst Aaron Allen.
Burger King Corp. has been pushing chicken, coming out with a limited-time menu in the fall where chicken was featured center stage. The menu included items such as popcorn chicken and a chicken Parmesan sandwich. The company declined to answer questions about its chicken strategy.
McDonald’s introduced the popular Chicken McBites for a limited time last year, and the Oakbrook-based company has been aggressively marketing its new Mighty Wings.
A global company with extensive resources, McDonald’s is looking about 18 months out when planning its menu and pricing, according to Allen, whereas smaller restaurants tend to hold off until they are really feeling the pressure.
Sonic, owned by America’s Drive-In Brand Properties LLC, launched two new premium chicken sandwiches in the fall because of the “growing popularity of chicken among diners,” according to a November release by the company.
The trend of moving down the food chain may be even more prevalent in the food manufacturing industry.
“What we're beginning to think is that with all of these pressures on consumers today, maybe we are now seeing a legitimate shift from red meat proteins into chicken,” said Donnie Smith, CEO of food-processing giant Tyson Foods Inc. in a 2013 first quarter conference call.
Smith used several statistics to support his belief that chicken consumption is on the rise. For example, in the final 26 weeks of the first quarter, fresh chicken pounds sold were up 2.8 percent, and dollar sales were up 8.5 percent. If the time frame is shortened to a 13-week view, pounds were still up 2.7 percent and dollar sales were up 9.2 percent.
“So if beef continues, which is likely, to increase and inflate the price with decreased supply and probably the influence of exports, we will start to see the consumer probably continue to have some more interest in chicken,” said Tyson Foods Chief Operating Officer Jim Lochner.
People are turning to chicken for health reasons, too.
In 2012, the National Institutes of Health reported finding “evidence that eating red meat on a regular basis may shorten your lifespan.”
Among people at high cardiovascular risk, 30 percent of major cardiovascular events such as heart attacks or strokes could be prevented if people switched to a Mediterranean diet rich in olive oil, nuts, beans, fish, fruits and vegetables. The findings, based on the first major clinical trial to study the diet’s effect on heart disease, were published on the New England Journal of Medicine’s website Feb. 25.
In its study, Technomic also found that people usually shy away from eating beef and pork because of health reasons.
“Consumers who do not eat beef or pork at least once every three months indicate that their hesitancy to do so is largely due to concerns about the healthfulness of these meats,” the firm reported.
But Levitt from the Butcher & Larder believes in moderation. Yes, you can have shorts ribs and brisket, but perhaps not every night. There are also a variety of cuts of beef that range in fattiness.
“If you really want to eat something lean and not too expensive, we will recommend a baseball steak.” For those of you who don’t know, a baseball steak is lean, center cut piece of top sirloin with a rounded shape. Levitt would be happy to introduce you.