Record high prices in the meat case may cause consumers to think twice before picking up those favorite steaks, chops or roasts. For some, high prices for choice cuts may cause them to reach for less expensive cuts or ground meat instead. As meat prices rise, consumers will likely shift their buying patterns as seen in the early stages of the economic downturn.  

Undaunted by the higher meat prices, however, consumer demand remains robust. “Demand just appears to be the driving force,” said Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago, according to a Bloomberg report. “Domestic and export demand are both improving rather dramatically.”

While overall demand for meat remains strong, the higher prices may affect consumer preferences and changes in purchasing patterns are expected. “The increasing retail meat prices will likely have a couple of impacts,” says Glynn Tonsor, agricultural economist, Kansas State University. “First, within the beef complex, consumers may continue ‘trading down’ from steaks to middle meats or ground products consistent with changes we observed during the recent recession. Secondly, a switch to cheaper alternatives, including both pork and poultry, would seem likely.”

The same trend of selecting cheaper cuts and the preference for ground meat may also become more common in the pork sector. “Consistent with adjustments in beef cuts, we may see demand for sausage increase at the expense of boneless pork loin,” says Tonsor.

Tonsor predicts that economics will play an increasing factor which will affect all three major meat protein categories. “The pork complex may benefit from switches in high quality products, say from beef steaks to pork loins. However, the parallel risk of movement from pork loin to chicken breast could also be expected.”

Tonsor expects the trend of high retail meat prices likely to persist as they reflect higher costs of production incurred by livestock producers. However, the effect of higher prices on export sales is less certain. “The extent to which these higher prices reduce quantity demanded by foreign consumers remains uncertain,” says Tonsor.

The strength of the U.S. dollar is a significant factor influencing U.S. meat exports. Expectations are for the U.S. dollar to weaken relative to foreign currencies thereby keeping even high-priced U.S. meat competitive on the international market. Currently, demand in key U.S. export markets remains exceptionally strong, partly due to reduced meat supplies being delivered by the European Union and Brazil.  

As meat prices rise, the importance of food safety and brand allegiance among domestic consumers will continue to gain importance. “The role of quality-enhancing attributes, such as food safety assurances and convenient and consistent products, will continue to grow as consumers face more expensive meat products,” says Tonsor.

Tonsor adds that as meat prices escalate, consumer expectations also rise. “Those consumers who sustain their meat consumption at a higher total expense will increasingly expect higher quality products for their dollar.”