Burger 2
The growing popularity of sliders and other gourmet burgers come at a time when ground beef's tepid performance at retail continues to alarm the US beef industry.

Suffering sales

Retail ground beef sales, which account for nearly half of all ground beef sales by volume and 39 percent by revenue, began to run into trouble in August 2014. That’s when the average monthly price of all ground beef, as reported by USDA, exceeded $4 per lb. for the first time ever (as reported in MEAT+POULTRY’s March 2016 issue). The average price only fell below that in January last year. It ended the year with a monthly low of $3.60 per lb. last December. But this was still extremely high compared to historical lows of less than $2 per lb.

More importantly, ground beef retail prices were high compared to pork and chicken items, which retailers routinely featured at prices well below ground beef. For example, the average retail price of bone-in chicken legs last December was $1.51 per lb. Even boneless, skinless chicken breasts sold then at an average $3.26 per lb. All pork chops meanwhile sold at an average $3.51 per lb., $0.09 below ground beef.

USDA in its retail price series also reports monthly ground chuck and lean/extra lean ground beef prices. Ground chuck’s average price last December was $3.70 per lb., while the lean/extra lean ground beef price was $5.67 per lb. Consumers in the grocery store appear prepared to pay a hefty premium for the three leanest categories of ground beef. But they account for less than one-third of all retail ground beef sales.

A key trend last year at retail was that the price of steak items declined enough to allow Americans to grill a lot more steaks. Taking a USDA Choice round steak as an example, its price fell below $6 per lb. for the first time in some years in January 2016. There were only five months last year when the price exceeded $6 and the December price was $5.76 per lb.

These price trends have continued to show up so far in 2017. Ground beef’s average price in January was $3.56 per lb., down only $0.04 from December. Ground chuck’s average price was $3.62 per lb., down $0.08, and lean/extra lean ground beef’s average price was $5.54 per lb., down $0.13. In contrast, USDA Choice round steaks averaged $5.56 per lb., down $0.10 from December.

Even more telling is how chicken and pork items have become even more competitive to ground beef in grocery stores so far this year. The average retail prices of bone-in chicken legs in January was $1.43 per lb., down $0.08 from December. Boneless, skinless chicken breasts sold at an average $3.20 per lb., down $0.06. All pork chops meanwhile sold at an average $3.46 per lb., down $0.05.

An examination of retail feature prices reveals the intensity of the competition facing ground beef. The average feature price in January for 70-79 percent lean ground beef was $2.15 per lb. The average retail feature price for a boneless pork loin in January was $2.08 per lb. Consumers were thus faced with buying featured regular ground beef at about the same price as a boneless pork loin and leaner ground beef at far higher prices than boneless, skinless chicken breasts. Retailers so far this year have featured New York strips and T-bone steaks heavily, in part at the expense of ground beef. Feature prices for both cuts continued to decline from late last year and more stores featured them.

Beef production in 2017 is expected to increase 3.2 percent on 2016’s total so ground beef and other beef prices will moderate further. But this is likely to mean even more retail steak featuring. In addition, broiler production is expected to increase 2.1 percent and pork production 3.5 percent. The bottom line is: ground beef sales at retail will continue to struggle this year against competing meats and increased steak sales. Sliders will become an even more important part of ground beef’s future.