Beef carcase balance in retail improves

Early lockdown saw beef mince sales soar which threatened to cause problems with carcase balance and profitability. The situation has since improved, with steaks taking a larger share.

Foodservice closures

In the first month of lockdown, primary beef sales in retail grew 20% in volume, rising on an uplift across the grocery retail market caused by people spending much more time at home. Despite this, beef producers were seriously concerned about their markets and cattle prices fell throughout April. This is because, ordinarily, the higher value parts of the beef carcase, such as top-quality steaks, would find a home in restaurants and pubs. When foodservice outlets closed in late March, it left processors with an excess of steak and a less profitable carcase.

Shoppers pick up more mince

Meanwhile, in the retail market, beef mince sales were rising quickly. Beef mince is a staple in British shopping baskets, as an affordable and versatile cut which is used in some of the nation’s home cooked meals and suitable for batch cooking. In the four weeks to 19 April 2020, 46% of households bought beef mince, up significantly from 36% in April 2019 (Kantar). In the last week of March, 66% of primary beef volumes sold through retail were sold as mince. This shift in product mix meant the average price shoppers paid for primary beef fell to just £7.01/kg in the last week of March, the lowest weekly average price in at least five years.

This initial rush towards mince risked exacerbating the balancing problem created by restaurants closing, with demand for lower value cuts growing while higher value cuts lost share. A weak Easter also meant roasting joints missed out on their usual seasonal bump in sales.

To help combat the challenges faced due to lockdown, industry bodies called upon retailers to purchase a wider range of cuts, in order to ease the pressure on carcase balance. In the second week of April, AHDB launched the Make It Steak consumer marketing campaign to encourage shoppers to recreate special steak meals in the home.

Steaks in recovery

Retailers increased their promotions on steaks in the following weeks, which helped to boost sales. In the four weeks to 17 May 2020, volumes were 44% above the same period in 2019. Although mince was still in growth, its pace had eased off to 23%.

This meant that steak’s share of primary beef volumes grew from 15% in April to 22% in May. The latest data, for the four weeks to 14 June, shows share has been maintained at 23%. This is above the 21% share it had in June 2019. Steaks are crucial to driving value in primary beef, representing 32% of spend and 18% of volume in the last year. This recent sales performance for steak will therefore have contributed to an improvement in the overall value of the primary beef category.

The average price consumers are now paying for primary beef sits at £7.77/kg (4 weeks to 14 June 2020), an increase of 6 pence on where it was in June last year. Foodservice demand and trade have also started to pick up which is providing support to cattle prices. Longer term, the impact will depend on the shape of the economic recovery and how consumer behaviour develops.

Read the beef agri-market outlook