June 2024

Retailers work hard to boost beef sales

Grocery stores have long used weekly sales circulars to entice cost-conscious consumers into stores. More recently, retailers launched online ads to further boost shopping.

Most advertised products are popular items that would show up on grocery lists anyway. Some promotional discounts are store manager’s efforts to pass on savings from big orders from suppliers.
Each week USDA’s Agricultural Marketing Service, Livestock, Poultry, and Grain Market News collects and summarizes advertised retail pricing information for several hundred products at major retail supermarket outlets. USDA gathers information from publicly available sources, including store circulars, newspaper ads, and retailer websites.

The National Retail Report - Beef provides data on 49 beef cuts. The cuts range from filet mignon to brisket to ground beef of various lean percentages. No processed products are listed. The report includes a national summary, plus data for the Northeast, Southeast, Midwest, South Central, Northwest and Southwest regions. The Midwest region covers 6,100 stores across Iowa, Illinois, Indiana, Kentucky, Michigan, Minnesota, North Dakota, Nebraska, Ohio, South Dakota and Wisconsin.

Two-thirds of retail circulars promote beef

Most advertisements in retail circulars feature specific items at specific "sale" prices. The retail feature rate is defined as "the amount of sampled stores advertising any reported beef item during the current week, expressed as a percentage of the total sample."

During the period of 06/07/2024 thru 06/13/2024, 72.0% of stores nationally featured beef, which was up from 66.1% the prior week and up from 64.1% the same week in 2023. This relatively high feature rate is not unexpected given that retailers have traditionally featured beef prominently in retail circulars. The feature rate ranged from an average of 79.8% of weekly circulars in the Northeast to 64.3% in the South Central with the Midwest at 74.1%.

Buy one, get one free offers help drive sales

Retailers also use no-price promotions, for example, buy one, get one free. USDA data for the second week in June showed 15.8% of retailers nationally used this special rate promotion for some beef items. That was up from 10.7% the week prior, but down from 19.7% in 2023. No-price promotions ranged from an average of 23.5% of weekly circulars in the Midwest to 5.0% in the Southwest.

This data alone, says nothing about demand. When you respond to a buy one, get one free sale for steak do you take just one? No, you take two. Buy one, get one free reduces the price per steak by half. Buying the two boosts your per capita consumption. You increase your quantity demanded solely in response to the lower price, but overall, your demand does not change. However, if the following week you go back to the store intending to buy one steak at the regular price, but buy two steaks, both at the regular price, your demand has risen.

BFigures 1 USDA quality grade and Figure 2 T-bone steak prices.randing and quality grades are additional marketing tools

Branding of beef retail products has gained momentum in recent years. A particular brand may enjoy a price premium in the market due to both demand for, and supply of, that brand. In the National Retail Report – Beef, the branded category "includes any advertised beef cuts marketed under a corporate trademark, or under one of Meat Grading & Certification Branch’s Certified Beef Programs."

Certified Beef Programs also known as branded beef programs, are much like other brands that have specifications for their products. Brands strive to differentiate themselves from others in the marketplace. Currently, 73 Certified Beef Programs are active. Certified Angus Beef, which was established in 1978, is the oldest.

Research indicates brand value is not strongly associated with the quality grade of beef. While branded programs typically do use beef quality grade as part of the brand’s specifications, they rarely promote grades. That’s likely because some consumers may not understand, or may be poorly informed, about formal beef grades.

In addition to branded products, the National Retail Report – Beef publishes prices of Choice and Select quality grade cuts by region. Only about 15% of beef is Select quality grade which generates limited price data to report (Figure 1). Retailers typically do not advertise Select cuts.

Non-labeled / other is the remaining category published and is "beef cuts advertised without a USDA Quality Grade." As expected, many of these items have much lower prices than Choice cuts. For example, so far in 2024, T-bone steaks in the Midwest without a USDA quality grade have averaged $4.17 per pound less than Choice T-bone steaks (Figure 2). Similarly, while fewer weekly comparisons are available, ribeye steaks, bone-in or boneless, without a USDA quality grade have averaged about $4.00 per pound lower than the comparable Choice ribeyes.

On the other hand, chuck/shoulder/arm roast, Choice and non-labeled / other prices, have been closer to equal. The same can be said for stew meat.

 

Lee Schulz, extension livestock specialist, 515-294-3356, lschulz@iastate.edu

Author

Lee Schulz

extension economist
515-294-3356
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