CE predicts a drop in demand for high-value meat products
A recent outlook from the European Commission shows that the perspective for each sector in the meat industry depends on the ability of retailers to market additional meat products for domestic consumption, as foodservice closure is a reality that hit almost every country in the world.
Beef and sheepmeat are the sectors expected to be most impacted by the crisis, while poultry seems to enjoy a large popularity among European consumers, although losses may be seen in value-added segments such as ready-to-eat. On the other hand, pork is expected to remain steady in terms of production and price thanks to increased demand from China.
n 2020, EU pork production is expected to grow slightly as continued demand for exports from Asia, in particular from China, keeps prices high and favors the increased weight of slaughtered animals. Growth will be driven by Spain, which is taking advantage of China's opportunity. Pork meat exports from Spain to that market doubled in 2019, and now represent 28% of total EU exports to China. In 2020, Spain will become the leading EU producer in number of animals slaughtered, although not in volume due to a lighter slaughter weight than Denmark. Covid-19 should not significantly affect the pork market, except for some specific catering products (for example, roast piglets in Spain and Portugal).
Channel prices reacted slightly to COVID-19, but should continue at high levels as long as Chinese demand continues. The main risk remains the spread of ASF in the EU.
Per capita consumption is expected to drop to 32.5 kg in 2020 (0.7 kg less than the previous year), as high prices favor other meats, particularly poultry.
In fact, increased demand for poultry has already been witnessed in Spain (+25%), Italy (15%) due to affordability in price. The beef sector is currently out of balance due to increased demand for cheaper products such as mincemeat and a dramatic drop in sales for high-value products. A similar situation is reported in sheep and goat meat markets. Surpluses of restaurant services in some countries will not be absorbed by retail sales. In addition, the seasonal demand for Easter and Ramadan will not materialize, and animals ready for slaughter may be frozen and directed to retail and catering in the second half of the year. The coronavirus will affect the market by pushing prices down.
For now, the EU agri-food industry has proved resilient in front of the COVID-19 crisis but in the long-term, the expected economic downturn will significantly affect demand for food, particularly for high-value products.
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