3 min read
My previous column highlighted the ever-changing market dynamics as it relates to quality grade. The discussion noted that, “Prime sales have grown dramatically during the past decade; total dollars generated from the category are up 322% - equivalent to an annualized growth rate of nearly 17%!! Simultaneously, dollar totals for Choice have grown just 6.8% annually while Select dollars have turned negative.”
In other words, both volume and value differences across the quality grades are making a difference in the marketplace. Moreover, those trends are fully entrenched. Consumers are voting with their dollars as clearly documented by recent research from Midan Marketing: 62% of Americans signify their preference to now spend more money in order to purchase premium beef.
The historical foundation for these market trends is best detailed by Dr. Daryl Tatum (Colorado State University). His 2015 white paper, Recent Trends: Beef Quality, Value and Price notes that, “In the past few years, as beef has become more expensive, beef consumers have become increasingly discriminating with respect to quality and value and have demonstrated a willingness to “trade up”, paying premium prices to obtain the kinds of beef products and eating experiences they desire.”
Dr. Tatum’s research also provides an insightful, alternate perspective. That is, ranking each step up in quality grade with the corresponding improvement in likelihood of a positive eating experience. For instance, the odds of having a satisfactory eating experience being nearly 7.5X greater with Prime versus Low Choice. (see second graph)
Most importantly, stacking the deck in terms of quality, consistency and taste further widens the spending gap. Tatum notes, “Recent demand trends suggest that many quality conscious beef consumers are unwilling to pay today’s prices for the level of performance provided by commodity beef and, instead, have opted to trade-up, purchasing premium beef products, thereby improving their odds of receiving a level of performance commensurate with the higher prices they are required to pay.”
That was true in 2015, and Midan’s research confirms it remains true in 2022. And per Dr. Tatum’s work, marbling is the catalyst to more spending. That notion is especially important with respect to the well-being of the production sector: more spending equals better prices.
Bottom-line: when it comes to beef quality, consistency and customer satisfaction, marbling is the anchor. It matters now more than ever. And as noted last week, that subsequently also means, “…huge differences in value and market share across USDA quality grades and the cattle that produce them.”
Nevil Speer is an independent consultant based in Bowling Green, KY. The views and opinions expressed herein do not reflect, nor are associated with in any manner, any client or business relationship. He can be reached at nevil.speer@turkeytrack.biz.
Related Posts
Coastal Plains Meat Company Announces $3.5 Million Acquisition and Expansion of Processing Facility in Eunice
EUNICE, La. — Coastal Plains Meat Company is making a $3.5 million capital investment in the...
Louisiana Beef
In the State of Louisiana, we are proud of our heritage and our community, and there’s no better...
Coastal Plains Pushing Beef Movement in Louisiana
FROM FOX-15 KADN NEWS STORY BY JEFF HORCHAK: