What might be the effect of November’s lockdown on UK beef and lamb?

On Thursday, the UK will enter its second national lockdown. The expectation is that this lockdown will not have the same dramatic effects as the previous one.

Panic buying may be less prevalent this time. Consumers have seen the food supply chain operate effectively. British meat performs relatively well in retail, compared to imported meat over indexing in foodservice. Food service businesses (pub/restaurants) are more prepared now, and many have found a way of providing delivery/collection services. We begin this lockdown with takeaways in place, unlike in March.

Consumer confidence had not yet recovered to pre-COVID 19 levels, and so the foodservice market has less volume to lose, although significant disruption is still expected. Similarly, retail volumes are already elevated, and so are expected to increase but by less relative to last time. This second lockdown is likely to prolong some of the pain already being felt in the industry – have consumers pushed back their expectations of returning to “normal” where foodservice would function at full capacity and large social events etc. can happen again?

The supply chain would already have been gearing up for Christmas. As a result, there may be less available cold storage than in March to provide flexibility in the event of supply and demand mismatching. Any pre-Brexit stockpiling in the supply chain may also exacerbate this problem.

Slaughtering has remained remarkably resilient in the face of COVID-19, although processing capacity could be more vulnerable to a second wave, and the resultant staffing issues, more than the second lockdown per se. However, schools are expected to remain open, which could alleviate some staffing pressure compared to the first lockdown.

BEEF

• Over the 24 weeks ending (w/e) 9 August, retail sales volumes of beef rose by 18% (48kt) – ahead of the total food and non-alcoholic drink uplift of 14%.
• Carcase balance was an issue the first time around, as consumers’ prioritised mince. Industry efforts to address this were successful and steaks are cheaper than before the first lockdown
• Consumers have been adapting to new market conditions.
• Some large burger chains expect to continue to provide uninterrupted takeaway services. Previously, we saw the loss of these for a few months.
• Beef is vulnerable to a slowdown in the continental foodservice market, which may affect exports in the short term.

LAMB

• In the 24 weeks ending (w/e) 9 August, retail sales volumes of lamb rose by 1% year-on-year (YOY).
• The first lockdown period covered Easter, an important time for lamb consumption. Unless it extends to Christmas, there is no equivalent event in November.
• People will likely continue to have some takeaways where lamb performs relatively well.
• Lamb is vulnerable to lockdown in France, which may affect exports in the short term.

What about Christmas?

It’s too early to say if the lockdown will be extended into Christmas. The first lockdown period covered Easter, and lamb in particular underperformed. This is likely to be repeated if the second lockdown extends to Christmas, and would cover all meats, especially roasting joints. Many planned events, from office parties to concerts and weddings may not take place. However, as they did over the summer, more people would likely remain in the UK over the festive period than usual potentially boosting consumer demand.

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