KANSAS CITY — When the reality of the pandemic began to sink in, retailers and their fresh perimeter supplier partners faced a big question: would consumers feel comfortable buying their fresh foods —foods that many like to see, touch and smell before buying —online.
In the case of beef, the answer seems to be a resounding yes, with online sales of roast beef, ground beef, steak and other fresh beef products soaring, said Shawn Darcy, senior director of market research at the Denver-based National Cattlemen’s Beef Association.
“Nearly 80% of people are satisfied with the quality of the meat they purchased via ecommerce,” said Darcy, citing survey data from the association. “And as transactions have gone up, more third parties are getting board.”
The association and its members are working with retailers to integrate apps like Chicory, which smooths the online ordering process for fresh meats and other items. King Soopers and Safeway are two of the retailers that have benefited.
Heading into the summer, grilling season and sustainability will be two of the big themes of the association’s marketing efforts, Darcy said.
He said this grilling season could “set a new plateau,” with consumers polled by the association saying they plan on grilling an average of 9.2 times a month. Even with restaurants reopening, a lot of people are still playing it safe. In April, many of those polled by the association said they would wait from three to six months before returning to their pre-COVID foodservice habits.
“Grilling speaks to the togetherness that beef can provide, which is something we’ll really be highlighting,” Darcy said.
The association’s sustainability efforts, meanwhile, will focus on continuing to tell the production story of the US beef industry.
“People don’t really know how their food is raised, and we want to tell them about all the great things ranchers and farmers are doing.”
High-tech solutions for supply chain and distribution issues
There are a number of compounding factors creating supply chain and distribution challenges for the retail beef industry, said Michael Farrand, global head of food for San Francisco-based predictive analytics firm DecisionNext.
In the United States, the two biggest challenges are a growing export market and labor shortage.
“Nearly every protein is dealing with a tight labor pool,” Farrand said. “Employees are stretched thin and there are not enough people to fill open positions. This is coupled with a recent Argentinian export ban and China pulling in record beef imports from the US.”
The industry is going through a rebalancing of the meat block, which has added to the issues in the beef market, he added. When food service shut down during the pandemic, DecisionNext’s models showed a movement out of the middle meats (this was especially true for beef) and a shift out of formula buys into the spot market. For the most part, fast food stayed open, and consumption transitioned to value cuts and grinds.
DecisionNext recently wrote a white paper on pricing impact during the pandemic. Now that the industry is in a rebalancing period, unlike anything meat buyers have experienced before, they can’t use 2020 data for accurate pricing insights, and they, therefore, must use 2019 data or best guesses.
“Right now, meat buyers need to decide whether they’d like to be driving forward and looking in the rear-view mirror, or looking forward with predictive modeling to make smart choices,” Farrand said.
DecisionNext uses a collection of three forecast models to help suppliers and retailers: ratio on carcass value from CME; machine learning that leverages seasonal historical prices as a predictor for future events; and fundamental econometric models.
By offering all three, Farrand said, DecisionNext offers patented pricing predictive power, which fuels informed decision-making.
“It’s a win-win for suppliers and retailers both.”