Australia

Australia: Lamb and beef surging in popularity as prices decrease

Shoppers are increasingly putting red meat in their trolley as retail prices push back against the inflation trend being seen more generally at the supermarket checkout.

Posted on Sep 15 ,00:05

Australia: Lamb and beef surging in popularity as prices decrease

This is according to Meat & Livestock Australia (MLA), which provides free and transparent market information and analysis service to the red meat industry. As part of this commitment, MLA has analysed the relationship between prices seen for livestock at the saleyards, and prices of red meat at the shops.

Throughout this year livestock prices for cattle and sheep have declined significantly following historic highs in 2022. While livestock prices have decreased this year, MLA notes that the reduction in average retail price of red meat lags prices paid to producers by approximately eight months. This is due to the amount of supply available, demand for Australian red meat in export markets, and rising input costs through the value chain.

In the previous 12 weeks to 13 August 2023, retail prices for beef and lamb have declined significantly, following a trend that’s continued throughout 2023, demonstrating that the fall in livestock prices has started to impact the price paid at the checkout.

The performance of Australian lamb and beef in the domestic market remains solid, with both proteins growing in sales volume and overall value. When comparing the last quarter with the same period last year, value growth for beef is 1.8% and for lamb is 4.2%.

Data from NielsenIQ HomeScan shows a 7.3% reduction in the price consumers are paying for lamb compared to a year ago, which is supporting a 12.4% increase in volume of lamb purchased at the cash register.

According to Nathan Low, General Manager of Marketing and Insights at MLA, lamb has seen a boom in purchases in recent months, as consumers notice its falling price and jump on the opportunity to purchase a high quality and nutritious protein.

“The price reduction is translating to increased purchasing frequency for several cuts”, Mr Low said.

“This is especially the case for the most popular cuts like lamb legs and chops, which are up 20% compared to one year ago”.

“Consumers see these price reductions and purchase more as a result. As this happens, retailers are looking to bring in customers with competitive pricing through catalogue promotions, and increased stock on the shelf,” Mr Low said.

For beef, NielsenIQ is reporting 7.1% growth in volume in the last quarter, compared to the same period last year, with an average retail price decrease of 4.9%. Frequency of purchase and volume per purchase are both up in the latest quarter as well.

“Consumer perception of beef and lamb is strong,” Mr Low said. “Tracking by Kantar, commissioned by MLA on behalf of industry, said that consumers see both beef and lamb as increasingly worth paying more for due to their high quality and taste”.

Historically, data on supply, pricing and consumer demand shows that it takes about eight months for livestock prices to translate to the retail shelf.

The last time in recent history that beef prices dropped considerably was in 2012, with the lag to shelf arriving eight months later, with those lower prices remaining for about nine months.

For lamb, which has seen a drop in prices in the fourth quarter of the calendar year every year since 2018, it experienced significant price drops in 2012-13 and 2016-2018. Correspondingly at this time, retail pricing took about nine months to fall.

According to Mr Low, there are a variety of factors that drive pricing in the retail market, as well as additional supply chain pressures occurring currently.

“Livestock prices are only one component of retail meat prices,” he said. “Producing retail meat requires investment in energy costs, transport and freight costs, labour costs, packaging and disposal costs, retailer margins, processor margins, PPE and hygiene, all of which have increased in price over the last year, along with almost everything else”.

“This is important to remember when considering when livestock prices increased as they did to historical highs last year. When saleyard prices were at those highs a year ago, retail prices increased but not at the same rate".

“What we are seeing now is that same trend, just in the opposite direction. Consumers need a degree of certainty for their shopping basket and retailers smooth the retail pricing impact over the longer term, rather than sharply increase or decrease the price of meat in accordance with livestock prices”.

 NEWSLETTER - Stay informed with the latest news!

Comments





Similar articles

UK

AHDB: Q1 2024 Pork cost of production

These estimates use performance figures for breeding and finishing herds. They indicate that the ...


Read more Read more
NEW ZEALAND

Beef + Lamb New Zealand report shows on-farm inflation at 2.8 percent

While this marks a significant decrease from the previous year's 16.3 percent inflation rate, the...


Read more Read more
BULGARIA

Vihren Dimitrov, Golyamo Vranovo: We are developing a new pork hybrid called Black Angel

EMN: After 50 years of existence, where does Golyamo Vranovo position itself in the European food...


Read more Read more
Websolutions by Angular Software and SpiderClass