The Resilience of Beef Demand: Navigating Price Hikes and Cut Preferences in the Summer Grilling Season

As the sweltering days of summer set in and the familiar scent of barbecued fare wafts through neighborhoods, the annual grilling season kicks off. This year, however, the sizzle on your grill might sound a bit different. With increasing beef prices, consumers are turning to secondary cuts such as brisket, skirt, hanger, and flank steaks to satisfy their cravings, saving pricier middle cuts for special occasions. Despite the changes in the cuts being grilled, one thing remains steady – the strong demand for meat.

Taking the Lead in Summer Grilling

According to Michael Uetz, principal of Midan Marketing, a leading meat-industry advertising, marketing, and research firm, the popularity of beef continues unabated. “Summer is the time for grilling, and consumers are getting very excited about putting some type of meat on the grill. Beef tends to lead the crowd there,” he says. This meat preference persists despite the rise in meat prices over the years due to tight animal supplies and inflation.

However, consumers aren’t letting price hikes deter them from grilling their favorite cuts. Midan’s research indicates a solid meat demand this summer, with brisket sales up 18%, flank steaks up 7.6%, and skirt steaks almost 11% higher. As Uetz mentions, “We are seeing consumers expand their repertoire and look beyond the traditional middle meats even for grilling season.”

Price Isn’t Everything

While price remains a pivotal factor in consumer decisions, it’s not the only one. The modern consumer considers other attributes when making a purchase. Midan’s beef attributes study revealed that 43% consider a U.S.-produced beef product as a top quality indicator, with 37% considering grass-fed labels as indicative of quality. Additionally, 30% of consumers look for humanely raised messaging or a U.S. Department of Agriculture organic label.

The growth in the grass-fed niche shows that price isn’t the sole factor affecting purchase decisions. Despite most grass-fed products being imported from countries such as Australia, New Zealand, or South America, consumers who purchase it view it as a healthy option, even with its higher price tag.

Innovative Restaurant Menus Amid Rising Costs

Inflation and tight animal supply have forced restaurants to get creative to maintain profitability while keeping menus enticing. Rather than sticking to expensive middle cuts like filets and porterhouses, chefs are branching out to cuts like the “Denver steak,” which comes from the chuck under blade, and the “baseball cut,” a top sirloin cut that resembles a filet.

Servers are also offering suggestions to guests, such as sharing a large entrée like the Tomahawk steak among four or more people. By doing so, guests can enjoy a great cut of meat at a fraction of the cost, showcasing the versatility of the cut.

Consumer Education and Evolving Preferences

As consumers evolve their meat preferences, they’re seeking meals they wouldn’t typically cook at home when they dine out. This trend has led restaurants to diversify their offerings, with a particular focus on educating guests about secondary cuts. There’s even interest in pricier grass-fed beef, with servers often explaining the differences between grass-fed and grain-finished beef to interested guests.

The Impact on Trading Activity and Livestock Prices

The strong meat demand has caused a surge in trading activity in livestock products this year. Makenzie Billings, Manager of Livestock Products at CME Group, states that supply chain issues related to COVID-19 and subsequent droughts have caused a pullback on cattle breeding, resulting in a delay in supply normalization.

This delay, along with the rising demand for beef, has caused volatility in live cattle futures markets and an uptrend in live cattle futures values since mid-2022. The Purdue University/CME Group Ag Barometer also indicates a positive outlook for livestock producers in the next five years.

Sterling Smith, director of research at AgriSompo, concurs, stating that beef prices will remain high due to feed prices being elevated relative to historical levels. He adds, “We are most likely in a sustained bull market for cattle as long as the consumer is willing to pay up.”

In summary, as the grilling season fires up, it’s clear that the American love affair with beef isn’t cooling down anytime soon. Despite rising prices and changing consumer habits, the demand for meat remains “incredibly strong,” ensuring that beef retains its throne as the king of the grill. So, whether you’re firing up a flank steak or a prime filet, remember – it’s not just about the cut, but the quality and the sizzle that truly make the summer grilling season special.