A Few Thoughts by John Nalivka: Ground beef demand
There has always been a great deal of conversation about ground beef. It is one of the most affordable and versatile beef products. But, in addition, Americans like hamburgers. If they didn’t, the fast food industry wouldn’t have grown at such a fast pace. I recently read an article presenting an infographic of the sales share for various beef items. Fresh ground beef accounted for 44 percent of beef sales in the U.S. in 2016.
For 2016, I estimated that ground beef accounted for 56 percent of total beef consumed in the U.S. This figure includes grind from U.S. cows, imported beef grind, and trim and grind from fed cattle. Comparing back to 1980, ground beef consumption was 41 percent of the total beef consumed. In terms of per capita consumption, that’s a fairly significant increase. However, in terms of the pounds of ground beef consumed, I have estimated that Americans consumed 31 lbs. of ground beef in 2016, the same as in 1980. Per capita consumption of all beef in 2016 was 55.6 lbs. while in 1980, U.S. consumers ate 76.4 lbs. of beef per person. So, while per capita beef consumption fell 21 lbs. over that 36 year period, ground beef consumption remained at 31 lbs. per person.
In 1980, the beef industry harvested (I am becoming more politically correct) 34 million cattle and produced about 22 billion lbs. of beef. In 2106, the industry harvested 3 million fewer cattle and produced 3 billion more lbs. of beef. At the same time, there was 1 million fewer cull cows slaughtered in 2016 than in 1980. Cull cows are a major source of grinding beef.
What is the bottom line of all these statistics? First, ground beef consumption as a percent of total beef consumption is increasing though the per capita pounds of ground beef remains the same as it was 36 years ago. While there is a growing demand for ground beef from the less traditional sources of fed cattle carcass (chuck, round, sirloin), there is a growing necessity to grind these items to meet the demand for ground beef. Perhaps, it’s just as well that consumers are also eating fewer roasts from the chuck and rounds?
If we consider supply in terms of using an increasingly larger share of fresh ground beef in fast food as opposed to frozen, the industry will have to grind an increasingly larger share of chucks, rounds, and sirloins from fed cattle carcasses. The trade-off in value will be interesting and demand will be the driver!