There has been a significant drop in sales at foodservice in most global markets, creating carcase imbalances.
The unprecedented and unpredictable nature of COVID-19 makes it difficult to report on the complete range of impacts to Australian red meat and livestock industry in an accurate and timely manner.
In recent weeks there have been a number of localised spikes in infection in global markets where new cases had dropped to almost zero, including Australia, Korea and China, highlighting the risk of a second wave.
As impacts are still felt globally and social distancing restrictions remain, this will continue to disrupt the consumption of Australian red meat, both domestically and internationally.
Here’s a summary of some consistent impacts seen in global markets:
Consumer demand
Concerns about financial security, the impact of COVID-19 on the economy and increasing pressure on household budgets have been the key drivers behind consumption and changes in purchasing behaviour for Australians.
More than two in five consumers globally are spending more time cooking and preparing food at home. While approaches to recipe and cuisine experimentation vary, familiarity remains key at this time.
MLA recently commissioned consumer research in China which confirms that consumers in a crisis gravitate to brands they trust. Australian beef and lamb have gained that trust over decades of combined industry efforts.
There has been a significant drop in sales at foodservice in most global markets, creating carcase imbalances.
Typically, higher value loin cuts make their way into foodservice, balancing out the overall value of the carcase for Australian processors. With loin sales down, it will remain a constant challenge for the industry to move the entire carcase while minimising the impact to overall value of the carcase.
Globally, operators in the foodservice sector that have been able to pivot to focus on takeaway or delivery models have been able to weather the COVID-19 storm more successfully, as consumers continue to pursue convenience.
As foodservice channels slow, demand for meat through retail, particularly online, has lifted, as more consumers are forced to eat more meals at home. Domestic market retail value growth is over 20% for the twelve weeks leading up to 19 April, with more than 130,000 new households purchasing beef.
Although sales have slowed after the March peak due to ‘panic buying’, they remain above year-ago levels, with May sales 14.4% higher than the same month last year.
Demand has been strongest for staple items such as mince and sausages, which were key contributors to recent spikes in fresh meat sales in the domestic market.
A shift to ‘localism’ has also occurred as more Australians are buying food and drinks from local businesses out of convenience and to ‘support local’. This has contributed to domestic butcher sales surging by about 39% for beef during the twelve weeks leading up to 19 April.
https://www.mla.com.au/news-and-events/industry-news/covid-19-impacts-on-markets13/