Australia: Lamb and beef rise in popularity as prices fall

During this year, cattle and sheep prices have fallen significantly from historic highs in 2022. Although livestock prices have fallen this year, MLA notes that declines in the average retail price of red meat lag behind prices paid to producers by about eight months. This is due to the amount of supply available, demand for Australian red meat in export markets and rising raw material costs in the value chain.

Over the previous 12 weeks to 13 August 2023, retail beef and lamb prices fell significantly, following a trend that has continued throughout 2023, demonstrating that falling livestock prices have begun to impact the price paid at the checkout.

Domestic performance of Australian lamb and beef remains stable, with sales volumes and overall protein values ​​increasing. Comparing the latest quarter to the same period last year, beef price growth is 1.8% and lamb price growth is 4.2%.

NielsenIQ HomeScan data shows a 7.3% decline in the prices consumers pay for lamb compared with a year earlier, fueling a 12.4% increase in the volume of lamb purchased in stores.

According to Nathan Lowe, general manager of marketing and analytics at MLA, there has been a boom in lamb buying in recent months as consumers notice falling prices and jump at the opportunity to purchase high-quality, nutritious protein.

“Lower prices lead to increased purchasing frequency,” Mr. Lowe said. “This is especially true for the most popular cuts, such as legs of lamb and chops. Consumers see prices go down and buy more as a result. When this happens, retailers look to attract customers with competitive prices through catalog promotions and increased shelf stock,” Mr Lowe said.

For beef, NielsenIQ reported sales volumes rose 7.1% in the latest quarter compared to the same period last year, with the average retail price down 4.9%. Purchase frequency and volume per purchase also increased in the latest quarter.

“Consumer perception of beef and lamb is strong,” Mr Lowe said. “Consumers believe that both beef and lamb increasingly deserve to pay more for them due to their high quality and taste.”

Historically, supply, price and consumer demand data show that it takes about eight months for livestock prices to hit retail shelves.

According to Mr Lowe, there are many factors influencing pricing in the retail market, as well as the additional pressure on the supply chain currently occurring.

“Livestock prices are just one component of retail meat prices,” he said. “Producing meat requires investment in energy costs, transportation and freight costs, labor costs, packaging and disposal costs, retailer profits, processor profits, personal protective equipment and hygiene, all of which have increased over the past year. This is important to remember given that livestock prices rose to all-time highs last year. When warehouse prices were as high a year ago, retail prices were rising, but not at the same pace. What we are seeing now is the same trend, just in the opposite direction. "Consumers want a degree of confidence in their shopping basket, with retailers smoothing out the impact of retail prices over the long term rather than sharply increasing or decreasing meat prices in line with livestock prices."