Solid Ground
By Sam Gazdziak, Senior Editor
Americans’ love affair with ground beef shows no signs of slowing down.
Hamburgers, tacos, meatballs and spaghetti, just to name a few. As long as America’s diet features those products and others like them, it will be good to be a ground-beef processor.
“We have an extremely strong and growing beef market overall, and ground beef is the largest share of that market,” says Randy Irion, director of retail marketing for the National Cattlemen’s Beef Association (NCBA), which contracts to manage retail programs for the Beef Checkoff Program.
Irion says that ground beef has pretty consistently represented about one-third of all beef dollar sales, as well as about 45 percent of pounds sold. According to a study funded by the program, there were nearly 2 billion pounds of ground beef sold in the United States in the 52 weeks ending August 27, 2006. That represented about $5.416 billion in sales.
One trend that Irion notes is the increasing popularity of leaner, healthier ground beef. Beef with a lean content of 70- to 77-percent remains the top-selling product, but healthy ground beef, with a fat content of five percent or less, is the fastest-growing product. Healthy ground beef sales grew by 9.8 percent in pounds and 15.3 percent in dollar sales. In the third quarter of 2006 alone, the numbers were 15.7-percent growth in pounds and 20.3 percent in dollar sales. Sirloin, which has a lean content of 90- to 94-percent, saw similar growth, with pound sales increasing 9.2 percent for the year and 9.7 percent for the third quarter, and dollar sales increasing 7.6 percent for the year and 8.0 percent for the third quarter. Those two categories showed the highest growth in the ground beef segment. “Consumers are looking for a leaner product, [and] they’re paying more for that product,” Irion says.
Another fast-growing area is natural or organic ground beef. Irion says that sales of natural and organic ground beef have grown at faster rates than conventional ground beef, although it is still a small segment, accounting for less than 2 percent of sales. Nevertheless, he says, “It is an important niche, and America’s beef producers are happy for anything that would grow demand.”
Trays are tops
Ground beef is available at the supermarket in several different forms. Irion says that chub sales are fairly static, accounting for about 10 percent of pounds sold and 6 percent of dollar sales. Ground beef in patty form, either fresh or frozen, is growing, and Irion notes that there are a number of brands of patties available. As consumers find themselves increasingly in a time crunch, the option of buying pre-made, easy-to-prepare burgers will become more and more attractive. “They might not have time to fire up a grill, but if there is a great burger available to them that they can warm up in a microwave or toaster oven, that’s going to be very popular,” he says.
The tray remains the dominant package for ground beef, accounting for more than 85 percent of both pound sales and dollar sales. The way that the meat actually ends up in the tray is another area of ground beef that has changed dramatically. The stores that grind their own beef are in the minority now and have been for some time. Retailers are finding it more convenient if the grinders package the meat, either in trays or chubs that are broken down and trayed in the supermarket. Along with the convenience aspect, supermarkets don’t have the ability to correctly label ground beef like grinders can. When the beef is sent to the retailers already ground, retailers and their customers will know the exact fat-to-lean ratio.
The rise of case-ready beef is one of the most dramatic changes in the ground-beef segment, Irion says. The NCBA periodically audits grocery stores to get a better understanding of the products being sold. In 2004, case-ready ground beef accounted for 66 percent of ground beef in the case. That was up 10 percentage points from the last survey in 2002. He notes that when the next audit is performed in 2007, he will expect similar growth.
One development that will occur in ground beef is the addition of mandatory nutritional labels. Irion says that the U.S. government will soon modify the labeling laws and will require labels on all ground product, be it beef, pork or poultry. The NCBA has conducted studies on labeling, and it believes that dual-declaration labeling is the best option.
Dual-declaration labels go a step beyond the federal labeling requirements and give nutritional information of the product in both its raw state and cooked state. “Nobody can eat the product raw,” Irion points out. “We want to put on a cooked [nutritional] statement, because that is a much more meaningful number for the consumer. A great deal of the fat is cooked out of the product before the consumer ever eats it.” With the dual-declaration label, consumers can get a true understanding of the caloric and fat content of the beef they’re eating.
Beyond labeling, the beef industry as a whole has taken great care to keep American consumer confidence in its products high. Over last few years, bovine spongiform encephalopathy (BSE), or mad cow disease, has been prevalent in international news, with several countries banning imports of American beef after an instance of BSE was found in 2003. This year alone, cattle have tested positive for BSE in the U.S., Canada, France and Japan.
Irion said that the industry has been taking steps to ensure that BSE never becomes a human health risk, with the first measures to prevent contaminated beef from reaching the U.S. marketplace introduced in 1989. The specified risk materials, or the parts of the animal that could carry the disease, are not allowed into the food supply.
The measures that the industry has taken to reassure American consumers about the safety of ground beef and other forms of beef have paid off. The beef industry has been surveying the American public about their perceptions of mad cow disease since 1996. The percentage of people who have heard about mad cow disease in the last month has fallen from the low 90s in early 2004 to 58 percent in the last survey, from Sept. 28, 2006. Meanwhile, the percentage of people who are confident that U.S. beef is safe from mad cow disease has consistently been in the upper 80s or low 90s, with the most recent survey showing a confidence rate of 94 percent.
The fact that beef sales overall and ground beef sales in particular continue to grow bodes well for grinders. Irion points out not only the extreme popularity of hamburgers but also the tremendous versatility of ground beef. No matter the meal or the cuisine type, there is almost always a way to ‘beef up’ an entrée.