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Research explores how food purchasing habits will affect beef industry

Analyst offers recommendations for beef industry's response to shift.

The U.S. is clearly experiencing a revolution in the way food is being purchased, delivered and consumed, as many consumers opt to purchase more and more food online, according to a new report from the RaboResearch Food & Agribusiness group. In fact, the report says the switch to online shopping is the biggest transition to occur in the grocery sector since the introduction of the supermarket in the 1930s.

The potential impact of these changes on the beef and cattle sector is the topic of the report -- “Food Fight! Online & Brick & Mortar Battle for Business. How Can Beef Ensure a Seat at the Table?" -- which explores how food reaches the average American consumer and what the beef industry will need to do to make beef an integral part of the consumption experience in this new world.

The report found that of the food purchased for in-home consumption, approximately 20% will be purchased online by 2025. These online purchases include not only traditionally packaged groceries but also complete meals packaged for home preparation in the meal kit category.

“Changes in where consumers buy groceries, when they buy and what they buy will inevitably force changes all the way through the supply chain. Nowhere will these changes be more dramatic than in perishables such as meat,” report author and RaboResearch Food & Agribusiness senior protein analyst Don Close noted.

The report further pointed out that access to a broader pool of customers independent of geography provides online shopping outlets with the ability to meet a wider variety of customer requests than brick-and-mortar stores; customers who want branded products or Prime-grade meat products can be supplied, as can the conventional shopper who wants the midrange of Choice product. This holds true for customers who want natural, non-hormone-treated cattle, organic or antibiotic-free product and even for customers who want grass-fed product. Customer pools are large enough for the supplier to be able to fulfill such niche expectations.

“These niche desires will result in additional demands on cattle quality and production specifications, which will lead to a wider price spread across all classes of cattle as well as a more detailed premium and discount schedule,” Close explained. “These changes are indicative of a permanent change in the way food reaches the average American consumer — and if the beef industry is to ward off any further decline in beef consumption, it must embrace these changes and make beef an integral part of the consumption experience, regardless of where it is purchased."

TAGS: Business
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