CHICAGO (Reuters) - Restaurant-quality T-bone steaks are becoming less rare at U.S. supermarkets as shoppers take advantage of lower prices and meat companies try to make up for slumping sales to dining establishments.
Supermarket sales of beef, pork and chicken are holding up surprisingly well despite a drop in overall meat consumption, according to meat industry leaders attending this week’s Reuters Food and Agriculture Summit in Chicago.
In 2008, overall U.S. meat consumption fell about 2 percent from 2007, with beef down about 3 percent, pork down 2.3 percent and chicken down 0.6 percent, according to the Food and Agricultural Policy Research Institute at Iowa State University.
It’s a different picture in supermarkets. During the fourth quarter of last year, retail volume sales of beef were up more than 3 percent, while chicken and pork volume rose by 9 percent and 5 percent, respectively, according to the Fresh Look Marketing Group, a research firm based in Hoffman Estates, Illinois.
FAPRI economist Jacinto Fabiosa said restaurant sales are the first to suffer in tough economic times.
“We are really focusing right now on one aspect of our industry -- the retail side,” Gregg Doud, chief economist for the National Cattlemen’s Beef Association, said at the Summit.
Supermarket shoppers can now find choice-grade steaks, which are commonly served in fine restaurants, selling at $5.00 to $6.00 a pound compared with $7.00 to $9.00 a year ago.
“On the steak side, you are seeing a lot of features for rib-eyes and T-bones at below $5.00 a pound. That is some of the best featuring we have seen in many, many years,” said Doud.
In Chicago, choice-grade T-bones were featured at $6.00 a pound, a savings of $3.00, according to an advertisement by retailer Target Corp (TGT.N).
The beef industry has been anxious to boost supermarket sales to make up for the weakness in restaurants, where about half of the U.S. beef is sold.
“We are working very hard with the retailers right now on summer and early grilling promotion programs,” said Doud.
Chicken sales have also taken a hit at fine-dining and casual restaurants, Joe Sanderson, chief executive of No. 4 chicken producer Sanderson Farms Inc (SAFM.O), said at the Summit.
As a result, his company has cut back production of chicken aimed at that segment and focused on supermarket sales.
“Demand through the grocery stores is excellent. It is outstanding,” said Sanderson.
Boneless breast meat is a key revenue item for chicken companies and is commonly shipped to restaurants, but supermarket prices have come down. The latest U.S. Agriculture Department data shows boneless breasts at supermarkets averaged $3.33 a pound in February, down 4 percent from a year ago.
While the increase in grocery store chicken sales has been helpful, Sanderson said it has not fully offset the decline in the food service business, which accounts for about half of the company’s sales.
“It is our view that demand will be slow through food service at least for the balance of this year because of the challenges that the consumers face,” Sanderson said. “If we are going to be profitable, it will be because of reductions in supplies.”
In February, the Laurel, Mississippi-based company reported a net loss of $6.7 million for the quarter that ended January 31, due in part to the slowdown in restaurant sales. A year earlier, it earned a profit of $6.2 million.
At Hormel Foods Corp (HRL.N), the recession has the company developing new products geared to affordability, Chief Executive Jeffrey Ettinger told the Summit.
Hormel, like other food companies, has developed a variety of meat products focused on convenience, but the economic recession may change that focus.
“Going forward I think there is going to be added attention to the affordability aspect of the product,” said Ettinger.
At retail, Ettinger said sales have been strong for its canned products such as Spam luncheon meat, Hormel chili and Dinty Moore beef stew, while its microwaveable items and refrigerated entrees have been weak.