Beef demand study reveals importance of product convenience, nutrition, safety
K-State, MSU ag economists say work sheds light on areas that need attention
A comprehensive study conducted by agricultural economists at Kansas State University and Michigan State University revealed areas in which the beef industry can concentrate its efforts to strengthen beef demand, despite a sagging global and U.S. economy.
The study showed that nutrition, safety and convenience remain important factors when it comes to shoppers' attitudes toward buying beef, said James Mintert, agricultural economist with K-State Research and Extension. Price also has an effect, but the study found that modest price fluctuations have small discernable impacts on beef demand.
"A lot of what's happened with the recent slowdown in demand is due to macroeconomics," Mintert said. "Much of this is out of the (beef) industry's control, but there are things the industry can work on to reinforce demand and prepare for a rebound when the economy starts to recover."
Other collaborators on the study were agricultural economists Ted Schroeder of K-State and Glynn Tonsor of Michigan State University. The study, designed to provide a comprehensive and updated assessment of factors influencing U.S. consumer demand for beef, was funded by the Cattlemen's Beef Board and several state beef and cattlemen's organizations.
Mintert, who is the agricultural economics state leader with K-State Research and Extension, presented the findings at the cattle industry convention in Phoenix in January.
Research has shown that although price is integral to attracting consumers to purchase beef, small price increases or declines by themselves have small impacts on beef consumption. Keeping that in mind, Schroeder said, the beef industry should focus on ensuring that consumers do not have non-price reasons to shift away from beef consumption.
"Consumers want consistently high quality beef products that are nutritious, flavorful, tender, safe, healthy and convenient to prepare," he said, citing the recent study and other research.
Not surprisingly, the economist said, the study revealed that food safety recalls adversely impact domestic and foreign consumer demand for beef. Recalls have been on a "troubling upward trend" in recent years. In fact, beef food safety recalls jumped from 18 in 2006 to 38 in 2007. That rise alone contributed to a 2.6 percent drop in domestic retail beef demand, the study concluded.
Consumers are also influenced by health and nutrition information and the study examined how articles in medical journals affect beef demand. For example, the number of medical journal articles published linking fat in the diet with cholesterol and heart disease nearly quadrupled from 1982 through 2004. Beef demand declined about 9 percent because of this influx of information linking fat in the diet to cholesterol and heart disease, according to the study. Similarly, the 268 percent increase in the number of medical journal articles published noting the importance of zinc, iron, and protein and diet from 1982 to 2007 boosted beef demand by about 7 percent, while also increasing poultry demand about 13 percent.
In addition, the study found that the net (positive minus negative) number of articles promoting low carbohydrate diets jumped by 245 percent from 1998 to 2003 and then fell after 2003.
"The media frenzy supporting low carbohydrate diets helped boost beef demand by nearly 2 percent from 1998 through 2003," according to the study's final report.
"For the industry, the implications are clear," Mintert said. "First, conduct research that helps identify positive impacts derived from beef consumption. Second, these findings need to be presented to health professionals, nutritionists and, especially, consumers. Furthermore, investing in the development of new production or processing technologies that enhance beef's nutritional properties can be a source of future demand improvement."
Convenience is another factor that researchers found key to beef demand. There are no direct measures of meat product preparation convenience at the industry level, so the study's authors examined two indirect measures: female employment outside the home and food consumed away from home.
The study found that as consumer demand for products that are convenient to prepare increases, beef demand suffers, but poultry and pork benefit.
"That may be because of differences in the pace of new product introductions," Mintert said. He cited a new products database search from 1997 to 2008 containing the words Convenient, Ease of Use or other time-saving claims that identified 5,633 new poultry products, but just 3,579 new beef products.
"There is no single dominant beef demand driver on which the industry should focus all of its attention, but this study did identify and quantify the key factors affecting beef demand," Mintert said. "We recommend maintaining a portfolio of beef demand enhancement programs designed to address the key drivers in this study.
More information on the beef demand study is available on the Web: http://www.agmanager.info and click on "Beef Demand Determinants Slide Show."
Beef study results indicate recent demand slowdown linked to economy
After a several-year resurgence that started in 1999, beef demand has slowed, thanks in part to a struggling economy both in the U.S. and abroad.
"A lot of what's happened with the recent slowdown in demand is due to macroeconomics," said James Mintert, agricultural economist at Kansas State University Research and Extension and one of the authors of a new study on beef demand. "Much of this is out of the (beef) industry's control, but there are things the industry can work on to reinforce demand."
Other agricultural economists involved with the study were Ted Schroeder of K-State and Glynn Tonsor of Michigan State University. The study, designed to provide a comprehensive and updated assessment of factors influencing U.S. consumer demand for beef, was funded by the Cattlemen's Beef Board and several state beef councils.
The research revealed that beef demand is responsive to changes in consumer expenditures on goods and services, Mintert said. On average, a 1 percent increase in U.S. consumer total expenditures results in a 0.9 percent increase in the quantity of beef demanded. The study indicated that, from 1982 through 2007, beef demand benefited from increases in consumer incomes and from consumer willingness to increase consumption expenditures even more rapidly than income was increasing.
The weakness in the U.S. macroeconomic outlook for 2009 and the ensuing expected decline in per capita consumer income does not bode well for beef demand this year, he said.
"Moreover, the impact of weaker consumer income is expected to be compounded by consumers' desire to increase savings in response to uncertainty and risk present in the financial and real estate markets," Mintert said. "An increase in consumer savings means consumption expenditures will decline even more rapidly than income and, given the importance of consumer expenditures, a decline in U.S. retail beef demand is likely during 2009." Mintert noted that, based upon the beef domestic retail demand index, U.S. consumer demand for beef declined about 4 percent during 2008.
The study indicated that it is unlikely that domestic beef demand will rebound until the U.S. economy strengthens and consumers regain enough confidence to spend more of their income.
"Since the beef industry can do little to change the industry-wide effect of the economy on beef demand, it is important to focus resources in areas where noticeable impacts are possible, such as focusing efforts on beef's nutritional strengths, food safety and introduction of new products that are convenient to prepare," Mintert said.