Beef Demand High Despite Higher Retail Prices

NORTHERN IRELAND, UK - Back in August, the LMC Bulletin (2177) carried some very positive reports on strong beef demand in GB over the course of the spring and summer. The reports focused on increased volume demand in the beef sector, despite higher farmgate prices.

8 September 2011

3 minute read

Europe

The cold summer and stagnant retail prices during May and June combined to drive increased beef sales through the summer, compared to the same period last year.

In the first half of this year, average farmgate beef prices have been around eight per cent higher in NI year-on-year. Meanwhile, retail beef prices were more or less unchanged compared to the same period last year. On a positive note, this meant that producers were receiving a greater share of the retail beef price.

In the four weeks ended 7 August 2011, retail beef prices started to increase relative to 2010 levels (see Figure 1). The latest Kantar Worldpanel data shows that during that period beef prices averaged £6.49/kg in GB, four per cent more than they were at the same point last year.

Despite this increase in retail prices however, volume sales have continued to rise relative to 2010 levels (see Figure 2). In the four weeks ending 7 August, volume sales were up by two per cent year-on-year.

From an industry perspective, this is a very positive development and part of the explanation for this increase in sales may be the weather. We have noted in the past how beef sales (particularly stewing) perform well in cold weather. Temperatures this summer (1 June - 15 August) have been on record as being the lowest in the UK in the last 13 years according to the Met Office.

During July / early August stewing sales were up by 10 per cent year-on-year, while sales of frying / grilling cuts were also up by a similar margin. Mince sales were barely changed compared to the previous year, while roasting sales were down slightly.

During July / August, just over half of all consumers surveyed, purchased beef on their shopping trips. This figure was three per cent higher than in the same period last year, while the average weight per purchase fell slightly.

With volume sales of beef two per cent higher and the average retail price up by four per cent, consumer expenditure on beef in GB over the four weeks ending 7 August was up by seven per cent year on year (see Figure 3).

This increase in expenditure in July and early August reflects the general increase in expenditure over the 12 weeks ending 7 August. During that period beef expenditure was eight per cent higher year on year with volume sales up by six per cent.

While the retail beef market continues to perform well, the lamb market remains in the doldrums. During July / early August, volume lamb sales were down by a quarter year-onyear.

However, with retail prices 18 per cent higher than last year overall expenditure on lamb was only 12 per cent lower (see Figures 4-6 adjacent (full report)). While this was the picture for four weeks during July and early August, the retail trade during the 12 weeks ending 7 August was not quite as depressing.

During that period, retail prices were 19 per cent higher, with volume sales down by 19 per cent. This led to a reduction in expenditure of four per cent year-on-year.

The reduced lamb sales are a reflection of increased prices on the home front and also of strong export activity which has stifled availability which in itself has led to reduced consumption.