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Angus Productions Inc.
Copyright © 2009
Angus Productions Inc.

Interpreting the Current Economy’s Effect on Beef Demand


PHOENIX, Ariz. (Jan. 29, 2009) — How have consumers reacted to the present recession regarding their willingness to buy beef, and what has the impact been on beef sales in foodservice and retail? Three industry analysts shared their perspectives during the Issues Forum Thursday, Jan. 29, at the Cattle Industry Convention in Phoenix, Ariz.

Joe Pawlak, vice president of Technomics, a foodservice research company, reported that casual dining at restaurants such as Olive Garden, Applebees, and Chili’s, is on a downward trend. Pawlak said that because of the economy these restaurants have raised prices, made portions smaller, and reduced the quality of their food offerings — and consumers are not buying it.

Additionally, Pawlak explained that the economy has consumers traveling less, which translates to a dip in lodging sales, which negatively influences foodservice sales as well.

He anticipates that further declines in foodservice sales will continue through 2009, with high-end restaurants especially affected. He also foresees smaller portion sizes and more coupons being offered by restaurants. Pawlak expects the food sector to start seeing a turnaround and some growth in 2010.

Until the tide changes, how are restaurant operators dealing with the decrease in sales? Pawlak says they are looking to add new products to entice customers and are also utilizing promotions such as coupons and meal deal bundles to encourage customer spending.

For the beef industry, he says these trends mean there is greater interest in value cuts, and he says, “Beef has an opportunity to lead in promotions and be featured in limited time offers.”

He adds, “Menu innovation aggressiveness can position beef positively and maintain beef’s position as a protein of choice during this time.”

Harry Balzer, a national expert on food and diet trends also emphasized that consumers are watching their dollars, but they still want convenient, easy meals. And, they especially want meals that can be eaten at home.

“Consumers are coming back and eating more at home,” he said. “They aren’t necessarily cooking at home, but they are getting prepared meals from grocery stores and restaurants that can be taken home and eaten.” This is a trend the beef industry needs to watch and find ways to tap into.

Andy Gottschalk, a beef industry economist, shared that he does not anticipate an increase in domestic beef demand until the economy rebounds — likely the last quarter of 2009 or early 2010.


But he emphasized that beef must maintain its value in the industry, saying, “The key to understand is that value drives revenue. We will consume everything. The question is how much revenue comes from that consumption. We need to recognize that beef value comes from the middle meats, and this industry will not survive if it is just selling hamburger.”

Editor’s Note: This article was written under contract or by staff of Angus Productions Inc. (API), which claims copyright to this article. It may not be published or distributed without the express permission of Angus Productions Inc. To request reprint permission and guidelines, contact Shauna Rose Hermel, editor, at (816) 383-5270.